Three conglomerate-led projects have committed ₹1.29 trillion to semiconductor manufacturing capacity in India since January 2025, all under the India Semiconductor Mission framework established in December 2021 and reauthorized with ₹76,000 crore in fiscal incentives last year. Tata Electronics leads with a ₹91,000 crore fabrication facility in Gujarat targeting 28-nanometer logic and power management chips. Murugappa Group's CG Power announced a ₹35,000 crore compound semiconductor line for defense and automotive power electronics. HCL Group committed ₹3,000 crore to an outsourced semiconductor assembly and test facility in Tamil Nadu.
The projects represent India's third attempt at building domestic semiconductor capacity after failed initiatives in 2007 and 2014. The current policy structure offers fiscal support covering 50 percent of project costs for fabrication facilities and 30 percent for assembly operations, with land and power subsidies handled at state level. All three projects target production start between Q4 2026 and Q2 2027, contingent on equipment delivery from ASML, Applied Materials, and Tokyo Electron — lead times currently running 18 to 24 months for advanced lithography and deposition tools.
The investment pace matters for three reasons. First, India currently imports 100 percent of its semiconductor consumption, running a $60 billion annual trade deficit in electronics components. Domestic automotive and defense procurement regulations passed in March 2024 now require 40 percent local content by value in power electronics by 2028, creating a guaranteed offtake market worth approximately $12 billion annually. Second, the projects position India as a trailing-edge manufacturing alternative to China at a moment when Western OEMs are required under U.S. export controls to dual-source outside of Chinese fabs for any product touching defense or critical infrastructure. Tata's 28-nanometer node directly competes with SMIC's Shanghai capacity, which remains under Entity List restrictions. Third, the capital commitments lock in equipment orders during a cyclical trough in semiconductor capex — global fab equipment sales fell 19 percent in 2024 — allowing Indian entrants to secure tooling at 15 to 20 percent discounts to 2022 pricing.
Allocators should track three follow-on developments. First, whether Tata secures a technology transfer partnership with an established fab operator — discussions with TSMC and GlobalFoundries reportedly stalled in Q1 2025 over intellectual property terms. Without a manufacturing partner, yield ramp timelines extend by 12 to 18 months. Second, power infrastructure delivery in Gujarat and Tamil Nadu, where grid capacity additions are running 14 months behind semiconductor project schedules. A fab consumes 30 to 50 megawatts of continuous load; delays cascade directly into production start dates. Third, the September 2025 review of India's Production Linked Incentive scheme for electronics manufacturing, which determines whether fiscal support extends beyond the current ₹76,000 crore allocation — early drafts circulating in June suggest an additional ₹55,000 crore for packaging and test capacity.
L&T, India's largest engineering conglomerate, announced in late August it will acquire 26 percent of CG Power's semiconductor subsidiary for ₹9,100 crore, bringing construction execution capability and defense sector relationships to a project that requires 840,000 square meters of cleanroom space delivered in 22 months.