India is putting close to $20 billion behind an effort to build more of its own semiconductors and smartphones, part of a widening campaign to turn the country into a serious rival to China as a global electronics workshop.
Prime Minister Narendra Modi’s cabinet signed off Wednesday on 1.9 trillion rupees in combined incentives. The bulk of it — 1.28 trillion rupees, or about $13.3 billion — goes toward the chip industry under a program the government is calling Semicon 2.0. A separate 625 billion rupees, roughly $6.5 billion, will fund a five-year push to expand phone manufacturing.
The semiconductor money is earmarked for chip design, building out fabrication capacity, research and development, and training a workforce the country doesn’t yet have at scale, Technology Minister Ashwini Vaishnaw stated. The government frames the effort as a bid for technological self-reliance — one it hopes will yield Indian-held patents and a deeper engineering base rather than just assembly-line work done on behalf of foreign firms.
The phone plan, formally the Mobile Phone Manufacturing Scheme, pays manufacturers incentives of 2.25% to 5% on qualifying sales, with an extra bonus of up to 1.5% for companies that source key parts and sub-assemblies inside India. Officials expect it to create roughly 60,000 direct jobs and, more ambitiously, to seed a domestic phone brand capable of competing with China’s.
“The Prime Minister has been clear that we need to build an Indian mobile brand,” Vaishnaw said.
The country already assembles plenty of phones for other companies. Apple builds several iPhone models in India through suppliers including Tata Electronics and Foxconn, and Samsung manufactures there as well. What India lacks is a homegrown name of its own — and the design and R&D muscle that comes with it. The new incentives are structured to reward exactly that shift, tilting the math toward firms willing to source and engineer locally instead of importing finished components.
Wednesday’s commitment builds on a $10 billion program India launched in 2021, which offered to cover half the cost of setting up semiconductor plants. That earlier round drew U.S. memory maker Micron Technology and the sprawling Tata Group to the western state of Gujarat, where the country’s first chips are now rolling off production lines. Six semiconductor projects worth a combined $14.7 billion have been cleared in the state. Nationwide, the 2021 plan has so far approved 12 manufacturing units and 24 chip-design projects.
The spending lands amid a global race in which governments from Washington to Seoul are pouring money into domestic chip production, chasing both self-reliance and the surging demand for silicon that now powers everything from artificial intelligence and cars to household appliances. For India — already the world’s most populous nation — the wager is that scale and state cash can eventually turn a low-cost assembly hub into a place that designs and owns the technology, too.
WHY IT MATTERS
- Apple’s China hedge. Apple already builds iPhones in India through Tata and Foxconn. Fatter subsidies make it cheaper to keep shifting production off the mainland — a trend U.S. investors have been watching closely as trade tensions simmer.
- A U.S. company is already in. Micron, an American chipmaker, was an anchor tenant of India’s 2021 program. Deeper Indian funding stands to expand that footprint and the broader U.S.–India tech relationship.
- The China rivalry is the point. Modi’s stated goal — an Indian phone brand to rival China’s — signals a strategic push to erode Chinese dominance in consumer electronics, with implications for pricing and supply well beyond India’s borders.
