India's semiconductor push spurs MSME precision manufacturing, ₹2,000 cr component exports: Ashwini Vaishnaw

India’s semiconductor push is beginning to create a wider precision-manufacturing ecosystem among micro, small and medium enterprises (MSMEs), with Electronics and IT Minister Ashwini Vaishnaw saying an industry player has already started exporting around ₹2,000 crore worth of components from India, with nearly 90% of the component ecosystem sourced from MSMEs.

Speaking at Semicon India 2026 in New Delhi, Vaishnaw noted that the next phase of India’s semiconductor programme would need to focus not just on fabs and chip packaging but also on the wider manufacturing base supplying machines, components, chemicals, and other inputs to the industry. “Already, they have started exporting about ₹2,000 crore worth of components from India and this entire component ecosystem, close to 90% of that is from MSMEs,” Vaishnaw said, referring to an industry executive he had met.

He stated that the precision-manufacturing capabilities that have developed alongside electronics manufacturing are increasingly supporting several industries, including mobile phones, aerospace, aviation, and defence, and can now become part of the semiconductor ecosystem.

“The way it has emerged because of the electronics manufacturing, the way things have emerged is precision manufacturing, and mostly in the MSME sector is emerging as a horizontal precision manufacturing capability,” he said.

The minister said the next challenge would be to improve the capabilities of these manufacturers through skills and applied research inside factories. “If I have to achieve this kind of product quality, then what are the changes I have to do in the CNC machines, in the way machining is done, in the way the processes are followed,” he said, adding that such work would need to become a major focus area for industry.

Government plans precision manufacturing institutes

Vaishnaw said the government was developing a multi-level training programme for precision manufacturing, beginning with a 240-hour Level 1 course and progressing through successive levels. The aim, he said, is to build a pathway through which a student entering after high school can progressively acquire advanced manufacturing skills.

“We should be able to take a young person who is like in a high school… over a period of different levels of skills, equivalent to a good mech engineer from any other part of the world,” he said. The first precision manufacturing institute is expected to begin operations soon, with more such institutes planned subsequently.

Vaishnaw also indicated that the government’s existing target of training 1 lakh technicians under Semicon 2.0 could be increased as demand from the industry becomes clearer. The talent push is part of the broader second phase of India’s semiconductor programme. Semicon 2.0 has six pillars covering chip design, semiconductor machinery and materials, fabs, advanced packaging, applied R&D and talent. The programme has an approved outlay of ₹1.275 lakh crore.

Under the first phase, the government had targeted 85,000 semiconductor design engineers over 10 years. Vaishnaw said during the conversation that 70,000 had been trained within four years, while more recent government disclosures say the 85,000 target has since been achieved ahead of schedule. 

India looks to build beyond fabs

Vaishnaw said India’s semiconductor strategy was built around a 20-year roadmap because of the complexity and long gestation period of the industry. The first phase focused on establishing foundational capabilities, including ATMP units and a first fab.

The government deliberately chose a 28nm-to-90nm range for the initial fab, which Vaishnaw said represented a large share of global chip volumes while being relatively less complex than leading-edge manufacturing. The objective was also to build capabilities around clean rooms, ultra-high-purity chemicals and gases, manufacturing processes and partnerships with global companies.

The minister also said five semiconductor units have already commenced commercial production and are both exporting and supplying Indian companies, demonstrating the ability of Indian facilities to compete on cost as well as quality. Government data confirms that five units have commenced commercial production under the semiconductor programme.

India’s first large silicon fab, being developed by Tata Electronics and PSMC in Dholera, is targeted to begin producing its first wafer in 2028. Vaishnaw said a substantial portion of the facility’s capacity was already booked. He also pointed to growing localisation in semiconductor equipment. According to the minister, companies are beginning to manufacture modules for machines in India that were previously imported.

The minister said India’s design capabilities could become a key enabler of this localisation because the ability to design complex equipment allows domestic companies to move beyond assembly and build more of the value chain locally.