Gujarat Leads India’s Chip Revolution, But Will It Deliver?

However, long before the Centre stepped in with this vision, Gujarat had already hit the ground running. In 2022, the state became the first in the country to roll out its own semiconductor policy (for the period 2022 to 2027) in alignment with the national programme. With an ambitious plan to bring in US$14 Billion (Rs 1.25 lakh crore) and create two lakh jobs in next five years, Gujarat had already started writing India’s silicon success story.

A Policy-Driven Push with Big Promises
Gujarat’s semiconductor policy covers the full chip-making value chain—from design and fabrication to testing, packaging, and display technologies. The government has promised land, incentives, and infrastructure to attract companies to set up semiconductor units in the state. It’s a well-rounded plan designed to complement the central government’s India Semiconductor Mission (ISM), which itself is backed by a ₹2.3 lakh crore incentive package.

Union IT Minister Ashwini Vaishnaw has stated that India aims to establish a full-stack chip- making ecosystem and operate in “mission mode”. The importance of semiconductors—powering everything from smart phones and laptops to medical devices, agri-tech, vehicles, and data centers—makes this mission central to India’s digital and economic future.

Reality Check: Progress Lags Behind Projections
Despite the bold announcements, implementation has been slow. So far, three companies—Tata Electronics, Micron Technologies, and CG Power—have announced a combined investment of ₹1.25 lakh crore in Gujarat. Tata Electronics is building a ₹91,000 crore semiconductor plant in Dholera. Micron Technologies, the US-based chip giant, is constructing a plant worth ₹22,516 crore in Sanand GIDC. CG Power has planned a ₹7,600 crore ATMP (Assembly, Testing, Marking, and Packaging) in the same area.

In the first phase, the Gujarat government had allotted 160 acres to Tata Electronics in Dholera and 93 acres to Micron in Sanand. Micron’s plant was inaugurated just 90 days after signing in 2023—a move hailed as swift and promising. Yet, months later, little visible progress has been reported. The plants were initially expected to be operational by December 2024, but no final locations have been confirmed, and ground-level construction is yet to pick up pace.

Tata Bets On Assam Too
While work in Gujarat remains sluggish, Tata Electronics is also investing ₹27,000 crore in a semiconductor assembly and testing plant in Jagiroad, Morigaon district of Assam. The state government has already allotted 517 bighas for the project. Once operational, the plant is expected to produce 48 million chips per day. Back in February 2024, Mr Vaishnaw said that India’s first indigenous semiconductor chip would be ready for the market by the end of the year. But so far, deadlines have been missed and doubts are being cast.

The Incentive Game: Attractive, But Not Enough?
Both the central and the state governments are offering significant incentives to attract semiconductor manufacturers:

• Capital Subsidies:
  Under the central policy, companies are eligible for a 50% subsidy on the total project investment. Gujarat’s policy adds another 20%, which means companies can potentially receive up to 70% of their total investment back in subsidies.
• Land Subsidies in Dholera Semicon City:
  Eligible projects receive a 75% subsidy on the first 200 acres; 50% for any additional land required for fabs or upstream/downstream projects approved under the ISM.
• Power Tariff Subsidy:
  ₹2 per unit discount on electricity for 10 years from the commencement of production. Additionally, all eligible projects will get full exemption from electricity duty under the Gujarat Electricity Duty Act, 1958.
• Water Subsidies:
  ₹12 per cubic meter for the first five years, with rates increasing by 10% annually over the next five.
• Stamp Duty and Registration Fee Waiver:
  100% refund on stamp duty and registration charges for eligible land-related transactions.
• Single Window Clearance System:
  A streamlined single-window mechanism has been established to fast-track all necessary approvals under various legal frameworks.

The package is generous and clearly designed to put Gujarat—and by extension, India—on the global semiconductor map. According to a Union Minister, Micron Technologies is expected to receive ₹3.2 crore in subsidies for every job it creates, underlining the scale of public investment in this sector.

What Lies Ahead? Ambition Versus Execution

Despite policy tailwinds and investor interest, doubts persist about the on-ground execution of India’s semiconductor ambitions. The complex and capital-intensive nature of chip manufacturing, combined with the long gestation period, means delays are not uncommon but they also raise questions about preparedness, infrastructure, and coordination.

Still, interest from foreign companies hasn’t waned—thanks to the state’s liberal policies. According to sources, Gujarat officials are in active talks with global semiconductor CEOs, and high-level delegations are visiting foreign countries to pitch India’s potential as a chip making hub.

Prime Minister Modi has repeatedly emphasized that semiconductors are of strategic national interest. Since 2014, India’s mobile phone manufacturing has jumped from ₹17,000 crore to ₹3.65 lakh crore—a 22-fold increase. Mobile exports have surged 13 times from ₹7,000 crore to ₹91,000 crore, while total electronics manufacturing has quadrupled to ₹8.3 lakh crore.

These achievements underscore what’s possible—and why semiconductors are the next logical leap. The foundations for three mega semiconductor plants were laid in March 2024—and with a fresh mandate in his third term, Modi has made semiconductor production a national priority.

But as it stands, the dream of turning Gujarat—and India—into a global semiconductor hub remains a work in progress. The policy is in place. The incentives are attractive. The investments are all lined up. Now, all that India needs now is rapid, sustained execution to turn this promise into a landmark achievement.