In December 2021 the Union Cabinet approved a programme worth 76,000 crore rupees, more than 10 billion US dollars, to change that, as part of a wider 230,000 crore rupee push for electronics manufacturing. The government framed the goal as making India a hub for electronics manufacturing while strengthening digital sovereignty and creating skilled jobs. [1]

The programme offers fiscal support of up to 50 percent of project cost for semiconductor and display fabs, support for compound semiconductor, sensor and assembly, testing, marking and packaging (ATMP or OSAT) units, and a Design Linked Incentive scheme for chip design companies. It also created the India Semiconductor Mission (ISM) as the dedicated agency to run the schemes. The support for fabs is provided on a pari-passu basis, meaning it is paid out in step with the company's own investment. [1][2]

The first major approval came in June 2023, when Micron announced an assembly and test facility in Sanand, Gujarat. Micron said it would invest up to 825 million dollars across two phases in a project worth up to 2.75 billion dollars in total, with the central government providing 50 percent of the project cost and the state of Gujarat incentives worth another 20 percent. The plant turns memory wafers into packaged DRAM and NAND products, modules and SSDs. [3]

In February 2024 the Cabinet approved three more units with a combined investment of about 125,600 crore rupees. The largest is a fab in Dholera, Gujarat, by Tata Electronics in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC), with an investment of 91,000 crore rupees and a planned capacity of 50,000 wafer starts per month at nodes including 28nm, aimed at chips for computing, power management, electric vehicles, telecoms and defence. [4]

The same approval covered a 27,000 crore rupee Tata assembly and test plant in Morigaon, Assam, planned to handle 48 million chips a day, and a 7,600 crore rupee assembly and test unit in Sanand by CG Power with Japan's Renesas Electronics and Thailand's Stars Microelectronics, planned at 15 million chips a day. The government estimated the three units would create about 20,000 direct jobs. [4]

Further projects followed, including a Kaynes Semicon plant in Sanand and a joint venture between HCL and Foxconn. According to SEMI, the organiser of the SEMICON India exhibition, 12 semiconductor projects had been approved under the first phase of the programme by 2026. [2][5]

The first plants are now operating. The ISM records that Prime Minister Narendra Modi inaugurated Micron's ATMP facility in Sanand on 28 February 2026 and the Kaynes Semicon plant in Sanand on 31 March 2026, and that a groundbreaking ceremony for the HCL-Foxconn venture was held in February 2026. SEMI reported ahead of SEMICON India 2026, held in New Delhi from 17 to 19 September, that three of the 12 projects approved in the first phase had started commercial production. [2][5]

Micron's original 2023 plan had targeted operations for the first phase in late 2024, so the plant opened more than a year later than first announced. The gap is a reminder that approval and production can be separated by several years. [3][2]

The Dholera fab is still in preparation. In September 2026 Tata Electronics described it as an 11 billion dollar project that will be India's first commercial 300mm fab, and announced agreements with Malaysia's Kelington to speed up operational readiness and with Japan's Sojitz and NRS on a supply chain for semiconductor materials. The company did not give a date for the start of wafer production. [6][7]

The government announced a second phase, ISM 2.0, in the Union Budget in February 2026. According to the mission, the new phase will focus on equipment and materials, design IP, supply chains and research centres, building on the manufacturing base created in the first phase. The budget also included 4,500 crore rupees to modernise the government-owned Semi-Conductor Laboratory (SCL) in Mohali. [2]

SEMI describes the next phase as built on pillars including chip, machine and materials design, more fabrication plants, a stronger ATMP and OSAT industry, research and development, and talent. It also cites projections that India's semiconductor demand could grow from about 100 billion dollars to 200 billion dollars. [5]

In our view, India's approach so far has been pragmatic: it has attracted assembly, test and packaging first, where investment is smaller and skills transfer faster, while backing one large mature-node fab. Whether ISM 2.0 can build a supplier base of materials and equipment around these plants will largely determine whether they become a durable industry or remain isolated projects.

Alongside chip manufacturing, India is funding access to AI compute. In March 2024 the Cabinet approved the IndiaAI Mission with an outlay of 10,371.92 crore rupees. Its first pillar, IndiaAI Compute Capacity, was intended to build an AI compute infrastructure of 10,000 or more GPUs through public-private partnership, alongside components for foundation models, datasets, applications, skills, startup financing and safe and trusted AI. [8]

Rather than building a single government supercomputer, IndiaAI empanels private cloud providers and subsidises the cost of their GPUs for eligible users. The first empanelment, launched in August 2024, featured more than 18,000 GPUs, including Nvidia H100, H200 and A100, AMD MI300X, Intel Gaudi 2 and AWS Trainium chips, offered at up to 40 percent lower cost to users. The empanelment runs for 36 months with an optional 12-month extension. [9]

The IndiaAI Compute Portal, last updated in August 2026, lists 15 empanelled service providers including Tata Communications, NTT, Sify, Yotta, CtrlS, Cyfuture and E2E Cloud. Researchers, startups, students and government bodies can apply monthly for subsidised capacity, and users pay any cost above the subsidy. [10][11]

India's semiconductor projects are focused on memory packaging, mature-node logic and power chips, so they will not change the supply of high-end AI accelerators in the near term. The more immediate change for compute buyers is on the cloud side: a growing set of Indian GPU providers, some backed by IndiaAI subsidies, is adding capacity close to Indian users and data. Prices and GPU generations still vary widely between providers. On Kovara you can explore GPU cloud regions in India, compare prices against other markets, or ask Kova which Indian providers currently offer the GPUs you need.