• India’s semiconductor funding jumped 83.4% to ₹7,000 crore in Budget 2025-26, signaling strong intent.
  • While ATMP and OSAT funding rose, fab unit allocations remain modest, raising concerns about global competitiveness.
  • Despite budgetary boosts, India lags behind Taiwan and South Korea, needing better infrastructure and execution to compete.

The Indian government has ramped up its commitment to semiconductor manufacturing, increasing the Ministry of Electronics and Information Technology (MeitY)’s allocation by 48.16% for FY26, reaching ₹26,026.25 crore, compared to ₹17,566.31 crore in FY25 (RE).

However, while this appears to be a major leap, a deeper look reveals a catch—are these investments sufficient to truly establish India as a global semiconductor powerhouse?

A striking 83.4% jump in semiconductor ecosystem funding—from ₹3,816.47 crore (RE FY25) to ₹7,000 crore (BE FY26)—shows intent. But intent alone doesn’t drive manufacturing.

The most crucial allocation, meant for setting up semiconductor fabrication (fab) units, has only seen a modest rise from ₹1,200 crore (RE FY25) to ₹2,499.96 crore (BE FY26).

Given that a single semiconductor fab can cost upwards of $10 billion, this increase seems more symbolic than transformative.

Similarly, funding for ATMP (assembly, testing, marking, and packaging) and OSAT (outsourced semiconductor assembly and test) units has risen by 56% (₹2,500 crore to ₹3,900 crore).

While this will help India move up the value chain, it doesn’t necessarily bring the country closer to actual semiconductor fabrication.

On the brighter side, the Semiconductor Laboratory (SCL) in Mohali, a long-overlooked entity, finally received attention, with its allocation skyrocketing from ₹11 crore (RE FY25) to ₹400 crore (BE FY26).

This signals a renewed focus on R&D. Moreover, the Design Linked Incentive (DLI) scheme has been doubled to ₹200 crore, supporting indigenous semiconductor intellectual property development.

Despite these increases, the Indian semiconductor mission still faces its toughest challenge—attracting global players.

While fiscal support has improved, India remains leagues behind semiconductor giants like Taiwan and South Korea in terms of infrastructure, supply chain integration, and technological expertise.

The government’s message is clear: India wants to be a serious player in the semiconductor race.

But unless these allocations translate into real-world execution, India risks remaining an ambitious contender rather than a true competitor.

Edited by Harshajit Sarmah