Chips as Strategic Infrastructure: The India Semiconductor Mission of 2022 and What a Resilient Electronics Supply Chain Requires

B.A.P-I Retrospective, 2020 to 2024. This paper looks back at 2022 and the lesson it holds for the protection of India's critical infrastructure.

1. Introduction

Few infrastructure lessons of the pandemic years arrived as quietly, or with as much consequence, as the semiconductor shortage. It produced no collapsed bridge, no burning substation and no grid map turned dark. What it produced instead was a long, grinding interruption in the manufacture of things a modern society treats as ordinary: cars, telecom equipment, consumer electronics, medical devices and the control systems that run power plants and railways. By 2022 it had become clear to policymakers in New Delhi that a chip is not merely a traded commodity. It is a dependency, and a dependency on which every other critical sector rests.

This paper looks back at 2022, the year in which India reshaped its semiconductor programme after a first attempt in December 2021, and asks what the episode reveals about the protection of the country's critical infrastructure. Writing in October 2026, with several approved plants now built or under construction, one is able to judge the programme by its trajectory, and that trajectory is encouraging. It also allows the next question to be asked: how manufacturing capacity can be turned into resilience for the sectors that depend on it.

2. The Shock of 2020 to 2022: How Dependence Became Visible

The shortage was felt first and most visibly in the automobile industry. The consultancy AlixPartners estimated in May 2021 that the shortage would cost the global car industry $110bn in revenue that year and that 3.9m fewer vehicles would be manufactured in 2021, almost twice its estimate of a few months earlier (City A.M., 2021, May 14). India was not spared. In August 2021 Suzuki Motor Gujarat, which supplies Maruti Suzuki, halted production on three Saturdays and ran some lines on a single shift, a disclosure Maruti made through a regulatory filing (Asia Times, 2021, Aug.).

What lay beneath these disruptions was geography. A briefing by the United States International Trade Commission recorded that in 2021 Taiwan held roughly 21 per cent of global semiconductor manufacturing capacity but 92 per cent of capacity for the most advanced chips (Jones & Krulikowski, 2024, Feb.). Concentration of this order is the very definition of a single point of failure. A natural disaster, a blockade or a political crisis in one region could therefore interrupt production in factories thousands of kilometres away. One finds that the pandemic did not create this vulnerability; it merely made visible a dependence that had been accumulating for three decades, and it has been a persistent one.

3. From the 2021 Programme to the 2022 Modifications

The Union Cabinet approved the Programme for Development of Semiconductors and Display Manufacturing Ecosystem on 15 December 2021 with an outlay of Rs 76,000 crore over six years (Business Today, 2021, Dec. 15). The official statement set fiscal support of up to 50 per cent of project cost, on a pari-passu basis, for silicon semiconductor and display fabs, and 30 per cent of capital expenditure for compound semiconductors, silicon photonics, sensors and assembly, testing, marking and packaging (ATMP) or outsourced semiconductor assembly and test (OSAT) units. It created the India Semiconductor Mission (ISM) as a specialised and independent body to serve as nodal agency, provided a design-linked incentive, and committed the Ministry of Electronics and Information Technology (MeitY) to modernise the Semiconductor Laboratory. Significantly, the same statement observed that trusted sources of semiconductors and displays hold strategic importance and linked them to the security of critical information infrastructure (NarendraModi.in, 2021, Dec. 15). That sentence is the hinge on which the whole programme turns.

The first version, however, graded fab support by technology node, and that gradation proved a weakness. On 21 September 2022 the Cabinet approved modifications that offered fiscal support of 50 per cent of project cost for all technology nodes, extended the same 50 per cent to display fabs, raised support for compound semiconductors, silicon photonics, sensors and ATMP or OSAT facilities to 50 per cent of capital expenditure, and added discrete semiconductor fabs to the target technologies. The government explained that an advisory committee of industry and academic experts had unanimously recommended uniform support, noting that nodes of 45nm and above, driven by automotive, power and telecom applications, make up about half the global market (PMIndia, 2022, Sep. 21).

The logic of the 2022 change deserves emphasis. The government's own rationale pointed to mature nodes serving automotive, power and telecom applications, which is to say the very sectors that critical infrastructure protection is concerned with. A policy that rewarded only the most advanced nodes would have chased prestige; one that supported every node could, at least in principle, address the components on which vehicles, power electronics and communication equipment actually depend. By removing the bias towards the leading edge, the modification brought industrial policy closer to the actual pattern of vulnerability.

4. What Happened Afterwards: Plants, Packaging and the First Output

Hindsight allows a measured account. On 29 February 2024 the government approved three further plants with a combined investment of Rs 1.26 lakh crore: a Tata Electronics fab at Dholera in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corporation with a capacity of 50,000 wafers per month, a CG Power ATMP unit at Sanand with Renesas Electronics and Stars Microelectronics, and a Tata assembly and test unit at Morigaon in Assam (Autocar Professional, 2024, Feb. 29). In September 2025 the Semiconductor Laboratory of the Indian Space Research Organisation presented Vikram, described as the first fully indigenous 32-bit microprocessor, built to withstand the conditions of space launch vehicles; by then ten projects had been approved under the Semicon India Programme (IANS, 2025, Sep. 2). On 28 February 2026 Micron's ATMP facility at Sanand, a project of Rs 22,516 crore producing DRAM, NAND and solid-state drive products, was inaugurated (IANS, 2026, Feb. 28).

In just over four years India moved from approving its first semiconductor programme to an operating memory assembly and test plant, a fab under construction, an indigenous space-grade processor and a pipeline of approved projects. The scale of the remaining task is equally clear, because India's own electronics industry has been growing quickly. Electronics imports reached $116.17 billion in 2025-26 according to Ministry of Commerce and Industry data (The Week, 2026, Apr. 16), and the semiconductor import bill rose from $11.9 billion in FY19 to over $30.3 billion in FY25. MeitY has accordingly set a target of 50 per cent self-reliance in semiconductor demand by 2035, with twelve ISM projects approved (The Tribune, 2026, Jun. 6). The direction is right and the foundations are in place; the measure of success in the next decade will be how much of the demand of India's own critical sectors is met from trusted domestic supply.

5. Chips as a Critical Infrastructure Question

For so far as critical infrastructure protection is concerned, the lesson of 2022 is that the semiconductor is an upstream dependency of every other protected sector. A transmission utility can harden its substations, a railway can install train protection and a bank can encrypt its networks, but each of them relies on controllers, relays, communication modules and servers whose chips are designed, fabricated and packaged elsewhere. The phrase in the 2021 Cabinet statement about trusted sources and critical information infrastructure points in exactly the right direction. The natural next step is a sector-wide instrument that tells an operator of an essential service which components it depends on, from whom, and with how many weeks of cover.

A resilient electronics supply chain, keeping this into consideration, requires four things beyond factories. It requires visibility, meaning a national mapping of semiconductor content in critical systems so that a shortage can be anticipated rather than discovered. It requires buffers, meaning strategic stockholding of mature-node parts used in power, rail, telecom and defence equipment. It requires trust, meaning testing and certification of the provenance of chips that enter control systems. And it requires diversification, because a domestic packaging plant that imports all its wafers from one region moves the single point of failure without removing it. The author has argued elsewhere that critical infrastructure protection should be treated as the third dimension of national security, alongside internal and external security, and that national resilience needs an institutional home rather than scattered ministerial schemes (Dash, 2025, Jan. 30). Semiconductors are the clearest illustration of that case.

6. Recommendations: Making the Semiconductor Mission a Resilience Mission

What comes through from all of this is that India's semiconductor policy has succeeded first as industrial policy, measured by investment approved, plants built and jobs created. That emphasis was right in 2022, when the country had to attract its first fabs. Having laid that foundation, India is now well placed to add a resilience dimension. The next phase should give the ISM, or its successor programme, an explicit resilience mandate: to publish an annual assessment of semiconductor dependence in critical sectors, to coordinate stockholding of critical mature-node components with sector regulators, and to require that chips used in protected systems pass provenance checks. Domestic capacity should be prioritised for the power, rail, telecom and defence markets that matter most in a crisis, rather than spread across consumer products alone.

Measurement matters here as much as money. A composite instrument such as the Bharat National Resilience Index, which the author has proposed as a twelve-domain measure of security and continuity, would allow supply-chain exposure in electronics to be scored alongside physical and cyber risk, so that progress is judged by reduced dependence rather than by announcements (Dash, 2025, Oct. 28). The shortage of 2020 to 2022 has passed, and India responded to it with a decisive programme. The task now is to build on that programme to ensure that the next shock finds its critical infrastructure with visibility, buffers and trusted alternatives already in place.