Design and IP, not just manufacturing, will decide India’s tech future

India’s technology ambitions have largely been narrated through billion-dollar announcements, fabs, assembly lines, packaging plants. But the more consequential story is happening one layer up the stack, in the architecture, intellectual property and design work that determines who actually owns the value in a chip, a telecom base station, an enterprise router or a consumer electronics product. On that front, India remains underweight, and closing the gap is now shaping up to be the real test of the country’s technology strategy, one that extends well beyond semiconductors alone.

Where the value actually sits
Semiconductor design accounts for nearly half of the total value addition in the chip value chain, and the fabless business model, companies that design chips without owning fabrication capacity, generates roughly 30-35 percent of global semiconductor industry revenue. India holds close to a fifth of the world’s semiconductor design talent and has built a mature design ecosystem over two decades. Yet that ecosystem overwhelmingly serves global chipmakers’ R&D centres rather than producing India-owned products. A handful of corporate- and VC-backed fabless companies are building systems-on-chip for domestic and global markets, but none have reached the scale needed to compete internationally.

The same imbalance runs through adjacent industries. India’s electronics production has grown sixfold in a decade, from ₹1.9 lakh crore in FY15 to ₹11.3 lakh crore in FY25, with exports up eightfold over the same period, largely on the back of manufacturing and assembly incentives for categories such as smartphones and wearables. Telecom equipment and enterprise networking gear tell a similar story: assembly and final production have scaled under incentive schemes, but the underlying chipsets, protocol stacks, switching silicon and system architectures inside routers, base stations and networking hardware are still overwhelmingly designed elsewhere. Manufacturing volume has grown; ownership of the technology inside the box largely has not.

Design as the next policy pillar
Semiconductor design is expected to be a central pillar of the next phase of India’s chip strategy specifically because it sits at the highest-value, most defensible part of the chain, the part that generates IP, licensing revenue and pricing power rather than thin manufacturing margins. The first India Semiconductor Mission closed with approvals for 12 projects and roughly ₹1.65 lakh crore in cumulative investment. Its Design-Linked Incentive scheme, though a smaller piece of that programme, scaled quickly: 16 tape-outs, six ASIC chips, ten patents, more than 1,000 engineers engaged, and private investment running at more than three times the scheme’s own outlay. A further ₹1.25 lakh crore allocation has reportedly been cleared for the next phase of the mission, with design capability expected to feature more prominently than it did the first time around.

The logic extends naturally beyond chips. Telecom is India’s most direct proof point: the domestic 4G/5G core and radio stack developed for state operators demonstrated that indigenous protocol and system design is achievable at scale, not just theoretically possible. Enterprise networking, switches, routers, data-centre equipment, remains far more import-dependent, with most silicon and system IP sourced from a handful of established global vendors. Extending India’s semiconductor design push into networking silicon and systems software would address a structural vulnerability in critical digital infrastructure, not just a commercial gap.

What stands in the way
The central obstacle across semiconductors, telecom equipment and enterprise electronics alike is commercialisation, not raw design capability. India has produced engineers and even working silicon; what it has struggled to produce is IP-owning, product-led companies willing to carry a design through certification, manufacturing partnerships and a global go-to-market. The ecosystem remains heavily services-oriented, contract design work for other companies’ products, rather than product-led, where an Indian company owns the architecture, the brand and the resulting revenue stream.

Capital allocation reinforces the imbalance. Investment in manufacturing incentives has consistently dwarfed investment in design capability, even though design is the segment that determines long-term value capture. Industry estimates suggest a meaningful share of the next mission’s outlay, often cited around 20 percent, would need to go specifically to design and electronics-IP companies to correct that balance, a proportion far above what has typically been allocated.

The way forward
Closing the design-IP gap will require a multi-pronged push that runs across semiconductors, telecom systems, enterprise networking and broader electronics simultaneously. That includes targeted incentives and grants for credible Indian design companies; deliberate demand-side support, with domestic telecom operators, enterprises and electronics brands committing to adopt homegrown silicon and networking solutions rather than defaulting to established foreign vendors; reduced dependence on external foundries and design partners to shorten product cycles; and wider use of AI-assisted design tools to compress development timelines that have historically put Indian design houses at a disadvantage against better-resourced global rivals.

The ambition articulated across the industry is for India to have globally recognised product companies, with their own architectures, software ecosystems and revenue streams, spanning chips, telecom systems and networking hardware by the mid-2030s. Manufacturing scale will remain necessary groundwork. But a genuinely design-led strategy, applied consistently from semiconductors through telecom and enterprise electronics, is what would let India capture a larger share of the value chain it is now investing so heavily to build, and convert manufacturing volume into durable technological self-reliance.

CT Bureau