Make in India: Semiconductors, Batteries, Electronics Push

In 2021, when a shortage of semiconductor chips shuttered automobile factories across the world, India watched with a peculiar mix of anxiety and opportunity. Cars sat unfinished in plants across Pune and Chennai. Factories that had just begun recovering from the pandemic halted again — not by disease, but by chips smaller than a fingernail, made almost entirely in Taiwan and South Korea. The vulnerability was impossible to ignore.

New Delhi noticed. Within eighteen months, the government had announced a $10 billion incentive scheme for semiconductor manufacturing, a separate PLI program for advanced chemistry cell batteries, and an expanded electronics manufacturing push targeting everything from mobile phones to server hardware. The ambition was unmistakable: India would no longer be a passive consumer of the hardware that runs the modern world.

Whether those ambitions will be realized is a more complicated question.

The semiconductor piece is the hardest. Building a chip fabrication plant — a "fab" — requires tens of billions of dollars, a decade of consistent execution, and access to an extraordinarily precise global supply chain of chemicals, gases, and specialized equipment. Taiwan's TSMC, which makes chips for Apple, Nvidia, and AMD, has been refining its processes for nearly four decades. India is starting from zero. The fabs announced so far are for mature nodes — chips that are functional but not at the cutting edge — and even those face real questions about water availability, technician pipelines, and power reliability.

Batteries are more tractable. The EV transition is creating enormous demand for lithium-ion cells, and India announced promising lithium finds in Jammu & Kashmir in 2023 — though commercial extraction is years away. Ola Electric, Tata, and a clutch of startups are building domestic cell manufacturing capacity. The PLI scheme has attracted credible bidders. But cell manufacturing at competitive cost requires scale that India hasn't yet built, and the supply chains for cathode materials still largely run through China.

Electronics assembly is where the actual progress is happening today. Apple suppliers — Foxconn, Tata Electronics, Pegatron — have meaningfully expanded India production. India exported roughly $29 billion in electronics in FY24, up several-fold from five years earlier. The shift is real, driven partly by companies wanting alternatives to China as geopolitical risk rises. Yet assembly remains the lower end of the value chain — the chips, displays, and advanced components still come from elsewhere.

The government's instinct — use subsidies to attract anchors, then build ecosystem around them — is economically sound in principle. It's how South Korea built Samsung, how Taiwan built TSMC. The difference is that those governments ran multi-decade industrial policies with extraordinary consistency and protected domestic markets aggressively. India's policy environment is more volatile, its infrastructure less reliable, its talent pipeline for advanced manufacturing considerably thinner.

What India realistically gets from this push, over the next decade, is meaningful electronics assembly capacity (the Apple trajectory continues), functional semiconductor packaging — the less glamorous but strategically important back-end of chip production — and some battery cell volume. A full-stack semiconductor industry, design through fabrication, remains a generational project at minimum.

That's not failure; it's sequencing. Even the modest gains reduce import dependency in strategically critical sectors and create manufacturing jobs that India needs as its services-dominated economy can't absorb everyone from a labor force that adds 12 million workers annually. The risk is that government loses patience with a decade-long project when political cycles run five years, or that subsidies get captured by connected incumbents rather than building genuine capacity.

India's electronics manufacturing chapter will be written over the next twenty years. The first few pages are promising if incomplete.