New Delhi: India has made significant progress in semiconductor design, packaging and fabrication infrastructure, but the absence of a strong domestic ecosystem continues to pose a major challenge to the country's efforts to build a self-reliant chip industry.

Industry experts say India now has the capability to design semiconductor chips domestically and is developing fabrication and packaging facilities. However, several critical stages of manufacturing still depend on overseas foundries, particularly in Taiwan and South Korea.

According to industry estimates, chip design contributes nearly 50 per cent of a semiconductor's value, and Indians account for around 20 per cent of the global chip-design workforce. Yet, domestic manufacturing and commercialization remain limited.

Companies such as VervSemi have developed indigenous chips for applications including smart electricity meters, a market that consumes millions of units annually. However, industry executives point out that domestic chip makers often struggle to secure market access and large-scale adoption.

Experts also highlight the absence of strong semiconductor product companies that can bridge the gap between chip designers and end-user industries such as electronics and automobiles. This missing link has hindered the commercial scaling of locally designed chips.

The Centre launched the India Semiconductor Mission (ISM) in 2021 with an outlay of Rs 76,000 crore to boost semiconductor manufacturing. Several projects are underway, including Tata Electronics' semiconductor facility in Gujarat and packaging units being set up by Micron, CG Semi and Kaynes Semicon. Additional facilities are under construction in Assam and Uttar Pradesh.

However, high manufacturing costs, expensive mask production, low domestic order volumes and regulatory hurdles continue to affect competitiveness. Industry representatives say packaging charges in India remain three to five times higher than those in some overseas markets due to lower production volumes.

Experts believe India has established the key pillars of a semiconductor ecosystem, but greater coordination between design firms, fabs and packaging units will be essential to achieve large-scale success.