As global tech companies look to reduce reliance on China and Taiwan, India is emerging as a new hub for semiconductor manufacturing. According to NITI Aayog, the MSME sector contributes approximately 29% of India's GDP and 40% of exports.
For Indian MSMEs, this presents a historic opportunity: to become critical suppliers in the global chip ecosystem. Here's how businesses can position themselves and take advantage of government-backed schemes to ride this semiconductor wave.
Why India's MSMEs Are Getting a Global Invite
Global semiconductor equipment makers and chip manufacturing firms are actively looking for manufacturing locations outside China and Taiwan:
- India has approved large semiconductor projects in states like Gujarat, Assam, Odisha, Punjab, and Andhra Pradesh.
- As one equipment maker said: "There are more than ten thousand parts in a single piece of semiconductor equipment … if a few hundred of those components start getting made in India, it can transform hundreds of MSMEs into global suppliers."
- Post-COVID supply-chain shocks have accelerated diversification, and India's engineering base and ecosystem are being viewed as strategic.
This means Indian MSMEs with the right skills, precision, quality systems, and automation can step into high-value segments like precision parts, semiconductor tooling, testing/packaging, and clean-room manufacturing.
Where MSMEs Fit in the Semiconductor Value Chain
MSMEs can participate in various roles rather than trying to make entire chips or fabs:
Precision Parts Manufacturing
Manufacture screws, mounts, frames, and precision milled components for chip-making machines
Semiconductor Tool Components
Produce vacuum chambers, optics supports, and substrates used in semiconductor equipment
Testing & Packaging Services
Provide testing, packaging, automation, and metrology services for chip production
Fabrication Supplies
Supply clean-room manufacturing materials and automation solutions
Strategic Advantage: By aiming for these satellite roles, MSMEs can insert themselves into the global supply-chain with lower initial capital, less risk, and quicker turnaround.
What It Takes: Skills + Quality + Technology
To partner with global chip companies, MSMEs must meet several benchmarks:
High-Precision Manufacturing
Micron-level tolerances with consistent repeatability
Quality Control Systems
ISO certifications, traceability, and zero-defects mindset
Advanced Machinery
Clean-room-grade processes and automation capabilities
Digital Systems
ERP, process monitoring, and data capture systems
These are the entry tickets into the semiconductor supply chain world.
Government Support & Incentives: Big Push for Chip-Ready Businesses
India Semiconductor Mission (ISM)
The Indian government is backing this shift strongly through the India Semiconductor Mission (ISM) and related schemes:
- The ISM offers funding, infrastructure support, incentives for manufacturing, design, R&D, and global collaborations
- Training programmes to build a skilled semiconductor workforce
- Schemes for global chip supply-chain partners include subsidies, grants, tax incentives, and infrastructure packages
For MSMEs: This means that becoming chip-supply-chain ready is not just a business choice, it's aligned with national strategy and supported by policy.
How Your MSME Can Position Itself (Action Steps)
Identify Your Niche
Choose a specific component, service or process you can excel at
Upgrade Capabilities
Invest in precision equipment, automation, and clean manufacturing standards
Get Certified
Obtain ISO certifications and implement quality systems
Register as MSME
Get Udyam registration for accessing schemes and benefits
Tap Government Schemes
Apply to India Semiconductor Mission and other grants
Form Global Partnerships
Connect with chip equipment makers and OEMs worldwide
Digital Marketing & Global Outreach
As an IT solutions + digital marketing company, we can help you build a global-ready website, showcase capabilities, use LinkedIn for outreach, and create content around "chip-supply-chain readiness" to catch global buyer attention.
Why This Matters for Your Business: Growth, Exports & Credibility
Access to Global Demand
Tap into worldwide semiconductor parts and services market
Higher Profit Margins
Better margins compared to conventional manufacturing
Export Opportunities
Foreign collaborations and technology transfer
Government Backing
Lesser risk with better visibility and support
Key Takeaways
- Global chip makers are looking for reliable partners outside traditional hubs, Indian MSMEs can step into this role
- To succeed, businesses must focus on precision manufacturing, quality, automation, and adherence to global standards
- Government programmes like the India Semiconductor Mission provide infrastructure, funding, training and incentives
- Your MSME can leverage its existing strengths (engineering, manufacturing) and bridge into the semiconductor domain with proper strategy
- For full impact, amplify your capability with digital visibility, content, global outreach and partnerships
Related FAQs
Ready to Enter the Global Semiconductor Market?
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