Sanand as India’s Semiconductor Hub: ‘Bridge’ to Silicon Valley

Syllabus: GS3/Economy

Context

• Recently, the Prime Minister of India inaugurated a semiconductor assembly and test facility by Kaynes Semicon in Sanand, Gujarat. 

About

• The project is part of the India Semiconductor Mission (ISM) and marks India’s push toward becoming a global semiconductor manufacturing hub.
• Sanand is being positioned as a critical link in the global semiconductor supply chain.
  • PM Modi described it as a ‘bridge between Sanand and Silicon Valley’.
• The plant (~₹3,300 crore investment) aims to manufacture intelligent power modules; and supply chips to global markets, including the US.

India’s Semiconductor Sector: Growth & Prospect

• Current market size:₹4.5 lakh crore (~$50–55 billion), and projected to ₹9 lakh crore (~$100+ billion) by 2030.
  • It is driven by electronics demand; AI, IoT, EV ecosystem growth.
• India’s share in the global semiconductor market: ~3% (design-heavy).
• India accounts for ~20% of global semiconductor design engineers.

India Semiconductor Mission (ISM)

• It was launched in 2021 by MeitY with objectives to build a complete semiconductor ecosystem i.e. design, fabrication, assembly, testing, packaging (ATMP).
• Financial Outlay: $10 billion (~₹76,000 crore) incentive package.
• Components: Semiconductor Fabs; Display Fabs; ATMP/OSAT (Assembly, Testing, Packaging); and Design Linked Incentive (DLI)
• Progress: Multiple semiconductor projects approved across Gujarat, Assam, and Karnataka.
  • Total investment pipeline: ₹1.5–1.6 lakh crore.
• India-Semiconductor Mission 2.0 was unveiled in the Union Budget 2026–27, shifting focus toward semiconductor equipment and materials to create a “full-stack Indian semiconductor ecosystem.”
  • Roadmap to achieve 3-nanometre and 2-nanometre technology nodes; aim to be among top semiconductor nations by 2035.

Key Government Schemes

• Design Linked Incentive (DLI) Scheme: Financial and infrastructure support for chip design startups; target of 100+ domestic semiconductor design firms.
• PLI Scheme for Electronics Manufacturing: Boosts demand-side ecosystem, linked with mobile manufacturing growth.
• Chips-to-Startup Programme: Access to EDA tools and fabrication support; covers 300+ institutions.
• National Critical Minerals Mission & Rare Earth Corridor: To reduce dependence on China (rare earths) and Taiwan (fabs).

Global Supply Chain & Strategic Positioning

• India’s membership in Pax Silica — a U.S.-led initiative — aims to secure supply chains for critical technologies including semiconductors and AI. 
• The global supply chain has faced significant disruptions due to pandemics and geopolitical conflicts — making a democratic, reliable alternative like India strategically important. 
• India aims to be a trusted alternative to East Asian hubs (Taiwan, South Korea) amid supply chain vulnerabilities.

Challenges

• Lack of advanced fabrication facilities; high capital requirement (~$5–10 billion per fab).
• Around 90% of chips are currently imported; significant technology gap vs. Taiwan, South Korea, USA.
• Supply chain dependencies on lithography equipment and rare earth minerals.

Conclusion

• The Sanand semiconductor facility reflects India’s transition from a consumer to a producer in high-tech manufacturing. 
• India aims to establish itself as a reliable semiconductor hub, aligning with the vision of ‘Make in India, Make for the World’, with strong policy backing, global collaborations, and supply chain integration.

Source: TH