India is intensifying its push for technological self-reliance, with 12 semiconductor projects now approved and ₹1.64 lakh crore committed to chip manufacturing and AI development. The recently launched Semicon 2.0 phase aims to expand domestic fabrication and packaging capabilities. For investors, this signals a long-term shift toward building a homegrown tech ecosystem, though success remains tied to execution speed, capital access, and the ability to reduce dependence on imported raw materials.
The Indian government is aggressively scaling up its efforts to build a homegrown technology ecosystem, with a massive ₹1.64 lakh crore investment directed toward semiconductor manufacturing and artificial intelligence. This push aims to lower reliance on foreign suppliers and establish India as a global tech hub. With 12 semiconductor projects now approved and the launch of the second phase of the Semicon India Programme, the sector is moving toward a significant operational phase.
The Semicon India Programme, which began in 2022, has reached a critical stage. Of the 12 approved projects, three—including facilities from companies like Micron, Kaynes, and CG Semi—have already started commercial production. In July 2026, the government cleared the next phase, Semicon 2.0, allocating an additional ₹1.275 lakh crore. This money is earmarked for expanding chip design, manufacturing, and assembly capabilities. For investors, this marks a shift from planning to execution, where companies involved in the supply chain may see demand growth as domestic manufacturing capacity rises.
The IndiaAI Mission is running parallel to this hardware push. The government has selected 20 homegrown AI foundation models for support, spanning large multimodal models and smaller language models. To enable these, the government has moved to lower costs for researchers and startups by providing subsidized access to compute power. With over 93 lakh GPU hours sanctioned across 237 projects and a high-performance system being set up in Delhi, the strategy is to lower the barrier to entry for domestic AI startups.
While this is a major policy push, investors should be aware of the nature of these projects. Building a semiconductor or AI hardware ecosystem is a long-term, expensive process that requires massive capital. The success of these initiatives depends heavily on the risk of delay or cost increase during construction. Additionally, India remains dependent on imported materials and specialized technology for now. A key area to track will be whether domestic companies can scale up their operations effectively to compete globally. The most important monitorables for the market will include project commissioning dates, the ability of companies to secure skilled talent, and sustained demand from local industries that will eventually use these chips and AI systems.