SYLLABUS

GS-I Prelims: Current events of national and international importance.

GS-3: Science and Technology- Developments and their Applications and Effects in Everyday Life; Indigenization of Technology and Developing New Technology. 

Context: The Government of India has notified a Special Economic Zone (SEZ) by Tata Semiconductor Manufacturing Private Limited at Dholera to establish the country’s first semiconductor chip fabrication plant. 

Key Features of the Semiconductor Fab Project

• The SEZ will be developed over 66.166 hectares with a proposed investment of ₹91,000 crore. 

• This is India’s first chip fabrication plant.

• The SEZ is designed to support electronic hardware, software, and IT/ITES services with integrated infrastructure. 

• It includes a dedicated approval and logistics mechanism to ensure ease of doing business. 

• The approval was granted by the Board of Approval (BoA), the apex body for SEZ-related decisions. 

• It is part of a broader push under initiatives like the India Semiconductor Mission 2.0, aimed at building a full-stack semiconductor ecosystem. 

• Policy & Regulatory Reforms: Amendments to Special Economic Zones Rules, 2006 (June 2025) tailored for semiconductor manufacturing.  Key reforms include: 

o Reduction in minimum land requirement (50 → 10 hectares) 

o Relaxation of encumbrance norms 

o Inclusion of free-of-cost supplies in Net Foreign Exchange (NFE) 

o Allowing Domestic Tariff Area (DTA) sales on payment of duties 

• These reforms aim to promote high-value, capital-intensive investments and improve ease of doing business.

Other Approved Semiconductor & Electronics SEZs

1. Micron Semiconductor Technology India Pvt Ltd is setting up a ₹13,000 crore ATMP unit in Sanand, Gujarat, to strengthen chip packaging capabilities. 

2. Hubballi Durable Goods Cluster Private Limited is establishing an electronics components manufacturing SEZ in Dharwad, Karnataka. 

3. CG Semi Pvt Ltd is developing a ₹2,150 crore OSAT facility to support semiconductor assembly and testing. 

4. Kaynes Semicon Pvt Ltd is setting up a ₹681 crore OSAT unit to enhance domestic semiconductor value chains.

Significance of the Plant

• Strengthening Semiconductor Supply Chains: With the global semiconductor market exceeding USD 600 billion and projected to cross USD 1 trillion by 2030, India’s entry into chip fabrication enhances supply chain resilience and reduces external vulnerabilities. 

• Boost to Electronics Manufacturing: As India’s electronics production has already crossed USD 115 billion (2023–24), domestic chip manufacturing will support key sectors like smartphones, automobiles, and consumer electronics, reducing reliance on imports. 

• Employment and Skill Development: The project will generate high-skilled jobs (~21,000) and promote advanced R&D, specialised training, and industry-academia collaboration in semiconductor technologies. 

• Integration into Global Value Chains (GVCs): The fab, along with ATMP/OSAT units (like Micron Semiconductor Technology India Pvt Ltd), positions India as a reliable node in global semiconductor supply chains, complementing hubs in East Asia and the US. 

• Support for Emerging Technologies: Domestic semiconductor capability is critical for AI, electric vehicles, telecom (5G/6G), defence systems, and data centres, making it strategically vital for future industries. 

• Strategic & Technological Sovereignty: Indigenous chip manufacturing reduces import dependence, enhances national security, and ensures control over critical digital infrastructure. 

• Catalyst for Ecosystem Development: The plant will anchor integrated semiconductor clusters, linking fabrication, design, packaging, and component manufacturing—thereby accelerating India’s transition to a full-stack semiconductor ecosystem.

About the India Semiconductor Mission

• It was launched in 2021 under the Semicon India Programme with a financial outlay of ₹76,000 crore to build a comprehensive semiconductor and display ecosystem. 

• Core Objectives:

o Fabrication & Manufacturing: Promote the establishment of semiconductor fabs, ATMP/OSAT units, and display manufacturing facilities. 

o Design & Innovation: Develop chip design capabilities, support semiconductor start-ups, and strengthen domestic intellectual property. 

o Research & Development: Encourage advanced R&D in areas like automotive electronics, telecom, and next-generation chips. 

o Global Partnerships: Foster international collaborations to integrate India into global semiconductor value chains. 

• Key Features:

o Provides financial incentives, infrastructure support, and policy facilitation to attract global and domestic players. 

o Promotes industry–academia collaboration for skill development and innovation. 

o Focuses on building a complete value chain, from design to manufacturing and packaging. 

• Recent Expansion (ISM 2.0 – Budget 2026): Expands beyond fabrication to include chip packaging, compound semiconductors, materials, and supply chain infrastructure. 

o Aims to create a full-stack, self-reliant semiconductor ecosystem in India.