India’s Semiconductor and AI Bet: Jobs, Growth and the Race for Tech Leadership

India’s semiconductor and AI push is creating the foundations for a higher-value economy while strengthening strategic autonomy. The two sectors can reinforce each other: advanced chips provide the hardware, while AI drives demand for computing, data centres and specialised processors.

The economic opportunity is substantial. Twelve semiconductor projects, involving more than ₹1.64 lakh crore in investment commitments, have been approved across six states, with three facilities already in commercial production. The ecosystem can generate demand for equipment, speciality chemicals, materials, logistics, testing and engineering services, creating spillovers beyond chip factories.

Semicon 2.0, approved with a ₹1.275 lakh crore outlay, expands the focus to chip design, equipment and materials, fabrication, advanced packaging, research and talent. This could increase domestic value addition and reduce exposure to concentrated supply chains.

AI offers another productivity engine. India’s shared AI compute capacity has crossed 45,000 GPUs, while AI Kosh hosts more than 14,000 datasets and 331 models. Indigenous foundation-model efforts, startups and Centres of Excellence can support applications in healthcare, agriculture, manufacturing, education and governance, while creating opportunities for researchers, engineers and developers.

Strategically, domestic semiconductor and AI capabilities can reduce vulnerabilities in sectors including defence, telecom, automobiles, energy and space. Global partnerships with the US, Japan, Europe and other technology economies can provide investment, expertise and market access while India builds domestic capabilities.

Yet leadership is not guaranteed. India remains dependent on foreign equipment, materials, semiconductor IP and frontier AI infrastructure. Compute, private capital, specialised talent, research intensity and proprietary technology remain gaps. AI may also disrupt routine IT and business-process jobs, requiring reskilling.

Infrastructure presents another challenge: fabs and AI data centres require reliable electricity, water, cooling and connectivity. Competition from the US, China, Taiwan, South Korea, Japan and Europe is intense.

India need not pursue complete self-sufficiency. Its stronger objective is strategic interdependence —owning more technology, diversifying suppliers and becoming indispensable to global value chains. Success would transform India from a major technology services hub into a country that increasingly designs, manufactures and owns technologies.