Sujai Shivakumar and Shruti Sharma
India’s semiconductor ambitions are entering a decisive phase. Backed by the ₹76,000 crore ($9.1 billion) India Semiconductor Mission (ISM) and a growing network of state-level incentive programs, the country is attempting to compress decades of ecosystem development into just a few years. Clusters are where economies of scale, supplier ecosystems, and advanced research and development (R&D) converge—turning isolated investments into sustainable industrial capacity and export-ready competitiveness. Emerging hubs in Gujarat, Tamil Nadu, and Karnataka mirror the factors that have long driven the United States’ own semiconductor clusters in New York, Texas, Oregon, and California—state-backed incentives, university-industry partnerships, and targeted infrastructure investment.
This parallel evolution creates a basis for collaboration, with both nations seeking to diversify supply chains, expand skilled talent pools, and secure competitive positions in an increasingly contested global market. For Washington, deeper engagement with India offers a trusted production base outside East Asia, expanded access to engineering talent, and greater resilience in a sector where security now rivals cost as the primary driver of strategic decisions. For New Delhi, U.S. experience in building integrated manufacturing clusters and scaling advanced R&D offers a tested roadmap for moving from design strength toward full-spectrum competitiveness—encompassing both manufacturing leadership and continued design excellence.
Q1: Where are India’s semiconductor clusters emerging?
A1: The ISM provides up to 50 percent fiscal support for eligible fabrication, outsourced semiconductor assembly and test (OSAT), and compound semiconductor projects, with states adding their own incentives and infrastructure. Alongside this manufacturing push, the Design Linked Incentive Scheme promotes chip design and intellectual property (IP) creation through R&D, prototyping, and commercialization support, including access to explanatory data analysis (EDA) tools and fabrication services.
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