India should prioritise chip packaging, testing before advanced fabs

India should focus on building strength in semiconductor packaging and testing before investing heavily in advanced chip fabrication, according to former NITI Aayog member Arvind Virmani. He believes a phased approach will help India establish a competitive position in the global semiconductor value chain while creating the foundation required for long-term manufacturing growth.

Packaging and testing offer a practical starting point
Speaking on India’s semiconductor roadmap, Virmani said the country should first develop capabilities in assembly, testing, marking and packaging before progressing to sophisticated chip manufacturing. He noted that semiconductor fabrication requires substantial investments, advanced technology, skilled talent and a mature industrial ecosystem, making it difficult for new entrants to compete immediately with established global leaders.

He stressed that achieving scale will be essential for long-term competitiveness. Alongside manufacturing infrastructure, India must strengthen its broader electronics ecosystem, including component suppliers, logistics networks, research capabilities and a skilled workforce capable of supporting semiconductor production.

Long-term roadmap targets value creation
Virmani’s remarks align with the roadmap outlined in NITI Aayog’s report on India’s semiconductor industry, which recommends building expertise in mature nodes, compound semiconductors and advanced packaging before moving towards cutting-edge fabrication technologies. The strategy also seeks to retain a larger share of semiconductor value creation within India through design, packaging and intellectual property development.

The roadmap sets a target of meeting 15 to 25 per cent of India’s domestic semiconductor demand by 2030 and 35 to 50 per cent by 2035. It also aims to position India among the world’s leading destinations for advanced semiconductor packaging while strengthening domestic manufacturing and exports.

India has already approved multiple semiconductor projects covering fabrication, assembly, testing and packaging under the India Semiconductor Mission. Industry experts believe these investments, combined with sustained policy support and ecosystem development, could help the country emerge as a significant player in the global semiconductor supply chain over the coming decade. Manufacturing Today India