Next 18 Months Crucial for India’s Semiconductor Ecosystem Growth: Report
The Union Budget 2026–27 allocated INR 1,000 crore for ISM 2.0, placing greater emphasis on equipment, materials, indigenous intellectual property and specialized talent.
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India’s semiconductor ambitions are entering a decisive phase as the focus shifts from policy momentum and infrastructure announcements to the practical challenge of execution. Industry experts say the next phase will test whether the country can move beyond fab construction to building a competitive manufacturing ecosystem supported by supply chains, talent and design capabilities.
A new report released by Endiya Partners titled India Semiconductor Ecosystem: From Policy to Execution at the India Electronics and Semiconductor Association Vision Summit 2026 highlights how India’s semiconductor push is moving from building fabrication facilities under ISM 1.0 to developing the capabilities needed to operate them under ISM 2.0. The study examines ecosystem dynamics, investment realities and execution milestones expected to shape the sector over the next 18 months.
The Union Budget 2026–27 allocated INR 1,000 crore for ISM 2.0, placing greater emphasis on equipment, materials, indigenous intellectual property and specialized talent. This marks a shift from earlier infrastructure-led efforts, as foundational ecosystem capabilities remain limited. India continues to import more than 90 percent of semiconductor equipment and materials, while domestic expertise in analog, RF and compute design IP is still evolving.
The report notes that building fabs marked the first phase of India’s semiconductor journey. Operating them competitively will require a deeper ecosystem that includes supply chains, tooling and skilled professionals.
The next 18 months are expected to serve as a critical test period. Tata Group’s Dholera fabrication facility, targeting production by December 2026, is considered a key milestone. However, success will depend not just on first chip output but on achieving target yields at 28nm and 40nm nodes within six to twelve months. Three OSAT facilities must scale to volume production, while 23 startups supported under the Design Linked Incentive scheme are expected to transition from tape-outs to revenue generation.
Semiconductor startup funding has grown from USD 5 million in 2023 to USD 50 million in 2025, yet remains modest due to structural challenges such as high capital requirements, commercialization timelines of three to five years and limited exit visibility. Renesas Electronics’s acquisition of Steradian Semiconductors remains one of the few notable exits. Investors are therefore shifting toward horizontal infrastructure opportunities including design automation, manufacturing intelligence and specialised IP platforms that offer faster time-to-revenue.
“The question has shifted from ‘will we build fabs?’ to ‘can we operate them competitively?'” said Sateesh Andra, Managing Partner at Endiya Partners. “That changes the investment landscape. The ecosystem needs design tools and manufacturing AI more urgently than another chip startup competing for foundry capacity.”
The report maps 10 approved projects mobilising INR 1.6 lakh crore, notes expanding global interest from companies such as Qualcomm, AMD, Intel and Arm Holdings, and identifies critical gaps in analog IP, manufacturing intelligence, equipment and industry-ready talent.
India’s semiconductor ambitions are entering a decisive phase as the focus shifts from policy momentum and infrastructure announcements to the practical challenge of execution. Industry experts say the next phase will test whether the country can move beyond fab construction to building a competitive manufacturing ecosystem supported by supply chains, talent and design capabilities.
A new report released by Endiya Partners titled India Semiconductor Ecosystem: From Policy to Execution at the India Electronics and Semiconductor Association Vision Summit 2026 highlights how India’s semiconductor push is moving from building fabrication facilities under ISM 1.0 to developing the capabilities needed to operate them under ISM 2.0. The study examines ecosystem dynamics, investment realities and execution milestones expected to shape the sector over the next 18 months.
The Union Budget 2026–27 allocated INR 1,000 crore for ISM 2.0, placing greater emphasis on equipment, materials, indigenous intellectual property and specialized talent. This marks a shift from earlier infrastructure-led efforts, as foundational ecosystem capabilities remain limited. India continues to import more than 90 percent of semiconductor equipment and materials, while domestic expertise in analog, RF and compute design IP is still evolving.
