India Semiconductor Mission

Also called: ISM · Topic: Manufacturing Industries of India: Location and Distribution · NCERT: Beyond NCERT

Meaning

The India Semiconductor Mission (ISM) is a central government programme, approved by the Union Cabinet in December 2021 with an incentive package of ₹76,000 crore. It gives companies up to 50% fiscal support (help from the government's budget) to set up chip factories, assembly and testing units, and chip design firms in India [1].

It matters because chips are the base input for phones, computers, cars, telecom, defence and artificial intelligence. India now depends on a few foreign suppliers for them. ISM also spreads high-tech industry to new states such as Assam, Odisha, Punjab and Andhra Pradesh [1][2].

Explanation

Why India needs its own chips (cause)

• Chips are the base input for all electronics.
• Semiconductors are materials such as silicon. We can control how well they carry electricity.
• They are made into chips, which are tiny circuits on a piece of silicon.

• Semiconductors power computers, mobile phones, telecom networks, cars, defence systems and artificial intelligence [1].

• India uses a lot of chips.

• India uses nearly 20% of the world's microprocessor output (as of 2026). A microprocessor is the "brain" chip of a computer [1].

• India's semiconductor market was about US$38 billion in 2023 and US$45–50 billion in 2024-25. It is expected to reach US$100–110 billion by 2030 [1].

• Supply is held by a few countries.

• Chip making is concentrated in Taiwan, South Korea, Japan, China and the USA [1].
• Taiwan alone makes over 60% of the world's semiconductors and nearly 90% of the most advanced chips [1].

• During COVID-19, chip shortages hit more than 169 industries worldwide [1]. This showed how risky it is to depend on a few suppliers.

• India assembles but does not make chips.

• Under PLI, India became the world's 2nd-largest mobile phone maker [3][4]. But most chips inside these phones are still imported.
• ISM is meant to move India from assembly to deeper value addition (doing more of the costly, skilled steps at home).

Parts of the chip chain that ISM supports

• Fab (wafer fabrication unit): a factory that prints circuits onto thin silicon discs called wafers. This is the hardest and most costly step in chip making.
• OSAT / ATMP (Outsourced Semiconductor Assembly and Test / Assembly, Testing, Marking and Packaging): units that cut finished wafers into chips, then pack and test them.
• Compound semiconductor: a chip made of two or more elements, such as silicon carbide (SiC). It is used in power electronics and electric vehicles.
• Chip design: the Design Linked Incentive (DLI) scheme has an outlay of ₹1,000 crore for chip design start-ups and MSMEs. It gives up to ₹15 crore per company [1].
• Skilled engineers: the SMART Lab at NIELIT Calicut aims to train 1 lakh engineers. More than 62,000 had been trained by early 2026 [1].

Progress and phases

• ISM 1.0 (December 2021): ₹76,000 crore, with up to 50% fiscal support for silicon fabs, compound semiconductor units, assembly and testing units, and chip design [1].
• By December 2025: 10 projects worth ₹1.60 lakh crore had been approved across 6 states [1].
• In 2026: the Cabinet approved two more units, with a combined investment of over ₹3,900 crore [5].
• ISM 2.0: announced in the Union Budget 2026-27, with ₹1,000 crore for FY 2026-27. It focuses on making semiconductor equipment and materials in India, and on Indian chip designs (intellectual property) [1].

Conditions a chip plant needs (location factors)

• A fab needs four things in large and steady supply:
• Reliable water: large amounts of ultra-pure water (water with almost all minerals removed) to wash the wafers.
• Uninterrupted power: a power cut of even a few seconds can spoil a whole batch of wafers.
• Ultra-pure chemicals and gases: most are imported, so a nearby port helps.

• Skilled engineers, supplied by training programmes such as the one at NIELIT Calicut [1].

• Unlike IT software, a fab is not truly footloose.

• A footloose industry can be set up almost anywhere because it does not depend on one bulky raw material.
• Chip plants also have light, high-value products. But they are tied to places with water, steady power, ports and large flat land.

Where it occurs

• Who and when: a national programme of the Government of India. It was approved by the Union Cabinet in December 2021, and ISM 2.0 was announced in the Union Budget 2026-27 [1].
• Approved units (as of December 2025), 10 projects in 6 states [1]:

Company (partner)	Location	Type
Tata Electronics + PSMC (Taiwan)	Dholera, Gujarat	India's first commercial silicon fab; ₹91,526 crore; about 50,000 wafer starts per month [1]
Micron Technology (USA)	Sanand, Gujarat	Assembly and test of DRAM and NAND memory chips; ₹22,516 crore [1]
CG Power (Renesas, USA; Stars Microelectronics, Thailand)	Sanand, Gujarat	OSAT; ₹7,584 crore [1]
Kaynes Technology	Sanand, Gujarat	OSAT; ₹3,307 crore [1]
Tata Electronics	Jagiroad (Morigaon district), Assam	OSAT using Indian packaging technology; ₹27,120 crore; 48 million units per day [1]
SiCSem (Clas-SiC, UK)	Info Valley, Bhubaneswar, Odisha	India's first commercial compound (SiC) fab; 5,000 wafers per month [1][2]
3D Glass Solutions (USA)	Info Valley, Bhubaneswar, Odisha	Advanced packaging and glass substrates [1][2]
CDIL	Mohali, Punjab	Expansion: high-power discrete devices (MOSFETs, IGBTs) [1][2]
ASIP (APACT, South Korea)	Andhra Pradesh	Packaging [1][2]
Vama Sundari Investments	Uttar Pradesh	Chip unit [1]

• State pattern: Gujarat has 4 of the 10 units (Sanand ×3, Dholera ×1). Odisha has 2. Assam, Uttar Pradesh, Punjab and Andhra Pradesh have one each [1].
• The four units in Odisha, Punjab and Andhra Pradesh are together worth about ₹4,600 crore and will employ about 2,034 skilled workers [2].
• Odisha: construction has started on India's first advanced 3D semiconductor packaging unit [6].
• Why Gujarat:
• Large, flat plots in the Dholera Special Investment Region, on the Gulf of Khambhat.
• A state semiconductor policy and quick clearances.
• West coast ports to bring in chemicals and equipment.

• The existing Sanand auto cluster near Ahmedabad.

• Why Assam:

• An eastern location close to markets in the North-East, South-East Asia and East Asia. This fits the Act East policy.

• Jagiroad is India's first semiconductor unit in the North-East.

• World: the main chip-making countries are Taiwan, South Korea, Japan, China and the USA [1]. ISM's partners come from the USA, Taiwan, the UK, Thailand and South Korea.

Don't confuse with

• PLI for Large Scale Electronics Manufacturing (2020): this scheme rewards companies for making more mobile phones and electronics in India [4]. ISM (2021) supports the making of the chips that go inside those phones.
• STPI (Software Technology Parks of India, 1991): STPI supported software exporters with data links, tax benefits and quick clearances. ISM supports chip hardware units such as fabs and OSAT.
• Fab vs OSAT: a fab prints circuits on wafers, which is the hardest step. An OSAT unit cuts, packs and tests finished wafers. Dholera (Tata–PSMC) is a fab. Micron at Sanand is an assembly and test unit, not a fab.
• Silicon fab vs compound fab: India's first commercial silicon fab is at Dholera (Gujarat). India's first commercial compound (SiC) fab is SiCSem in Odisha [1][2].

Prelims Hooks

• ISM was approved in December 2021, with ₹76,000 crore and up to 50% fiscal support [1].
• Unit–place matches:
• Tata–PSMC fab → Dholera (Gujarat)
• Micron → Sanand (Gujarat)
• Tata OSAT → Jagiroad (Assam)
• SiCSem and 3D Glass → Info Valley, Bhubaneswar (Odisha)

• CDIL → Mohali (Punjab) [1][2]

• Trap: Micron's Sanand plant is an assembly and test unit, not a fab. India's first commercial silicon fab is at Dholera [1].

• Gujarat has the most ISM units (4 of 10). Jagiroad (Assam) is the first semiconductor unit in the North-East [1].
• DLI scheme: ₹1,000 crore for chip design, up to ₹15 crore per company [1].
• ISM 2.0 was announced in Union Budget 2026-27, with ₹1,000 crore for FY 2026-27. It focuses on equipment, materials and Indian chip designs [1].

Mains Points

• From assembly to value addition (GS-III):
• PLI made India the 2nd-largest phone maker, and phone exports grew about 8 times between FY20 and FY25 [3][4].

• But most of the value still comes from imported chips. Fabs and OSAT units at Dholera, Sanand and Jagiroad are needed to deepen the supply chain.

• Locating fabs is a resource problem (GS-III):

• Fabs need ultra-pure water, steady power, imported chemicals and skilled engineers.

• Gujarat was chosen for its land, policy and ports. Water stress and an unreliable power grid are still risks in semi-arid regions.

• Regional balance and strategic security (GS-I / GS-III):

• IT and electronics are crowded into southern and western metros and the NCR. ISM units in Assam, Odisha, Punjab and Andhra Pradesh partly correct this imbalance [1][2].
• Taiwan makes over 60% of the world's chips, and the COVID-19 shortage hit more than 169 industries. Both show the risk of depending on a few suppliers. ISM, DLI and talent programmes aim to make India part of a more secure global supply chain [1].

Related concepts

• Information technology and electronics industry
• Electronics manufacturing hubs

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• Information technology, electronics and semiconductors