The Fab-Labour Paradox: Why India Produces 1.5 Million Engineering Graduates a Year but Only 2,000 Are Qualified to Work in a Semiconductor Factory

Expert Comment — South Asia Programme

2026-03-10

TWhen the Indian government announced the India Semiconductor Mission in 2022 with a $10 billion incentive package, the response from global chip companies was initially enthusiastic. Micron committed $2.75 billion for an assembly and test facility in Gujarat. The Tata Group partnered with Taiwan’s PSMC for a $3 billion fabrication plant. Applied Materials announced a $400 million R&D centre in Bangalore. The vision was compelling: India as a trusted alternative to China in the global semiconductor supply chain. But as these commitments move toward implementation, a fundamental constraint has become apparent: India does not have enough qualified engineers to operate the facilities it is trying to build.

India produces over 1.5 million engineering graduates annually, the second-highest number in the world after China. This statistic is routinely cited by government officials as evidence of India’s readiness for semiconductor manufacturing. The reality is different. Industry surveys indicate that fewer than 10 per cent of Indian engineering graduates are employable in the semiconductor industry. The specific skills required for semiconductor manufacturing — semiconductor physics, process engineering, cleanroom protocols, statistical process control, materials science, and quality management — are taught in fewer than a dozen Indian universities. The Semiconductor Industry Association estimates that India needs approximately 50,000 qualified semiconductor engineers to execute its current investment pipeline. The Indian education system produces fewer than 2,000 graduates annually with the relevant qualifications.

The gap between the supply of and demand for semiconductor talent reflects a fundamental mismatch between India’s higher education system and the needs of advanced manufacturing. Indian engineering education is heavily theoretical, with limited laboratory exposure, outdated curricula, and insufficient industry engagement. The National Education Policy 2020 recognises these problems and proposes reforms, but implementation will take years. The semiconductor industry cannot wait for the education system to reform itself. Companies establishing facilities in India will need to import skilled workers from Taiwan, Korea, and the United States, creating a dependency that undermines the strategic logic of the semiconductor push.

Building a semiconductor workforce takes years, not months. A process engineer typically requires two to three years of on-the-job training before becoming fully productive. A senior fab manager requires ten to fifteen years of experience. The training pipeline for semiconductor professionals in India is virtually non-existent. The government has established a $1 billion semiconductor research fund and plans to create centres of excellence in semiconductor education, but these initiatives will take years to produce results. In the meantime, Indian companies will compete for a limited pool of qualified professionals, driving up salaries and costs.

Semiconductor talent cannot be created overnight. It takes five years to train a process engineer and ten years to develop a senior fab manager. India is attempting to build an industry that requires a workforce it does not have.

India’s genuine strength in semiconductors is in chip design, not fabrication. Over 2,000 chips are designed in India annually, more than any country outside the United States and China. Indian engineers have played leading roles in global semiconductor companies for decades. The design ecosystem is a genuine national asset. A more realistic semiconductor strategy would focus on leveraging this design strength, building assembly and test capabilities as a bridge to more advanced manufacturing, and developing the workforce necessary for fabrication over a 15-to-20-year timeline. The current strategy, which aims to jump directly to leading-edge fabrication, risks wasting resources on an unachievable goal while neglecting the genuine strengths that India already possesses.

The government has launched several initiatives to address the talent gap in semiconductor manufacturing. The India Semiconductor Mission includes a $1 billion research fund, partnerships with leading international universities, and the creation of centres of excellence in semiconductor education. The government has also announced plans to establish semiconductor design and manufacturing curricula at 50 Indian universities. However, these initiatives are in their early stages and will take years to produce results. The timeline for developing a semiconductor workforce is measured in years, while the timeline for building semiconductor facilities is measured in months. The mismatch between workforce development timelines and facility construction timelines is a fundamental constraint on India’s semiconductor ambitions.

The infrastructure requirements for semiconductor manufacturing extend beyond workforce development. A leading-edge fabrication plant requires absolutely reliable electricity supply, vast quantities of ultra-pure water, and sophisticated waste treatment facilities. India’s industrial infrastructure, while improving, is not yet at the level required for advanced semiconductor manufacturing. Power outages, water shortages, and logistics bottlenecks remain common in many parts of the country. The Gujarat government has made significant infrastructure investments for the Dholera Special Investment Region. However, the infrastructure gap between current capabilities and the requirements of semiconductor manufacturing is still substantial and will take years to close.

A realistic semiconductor strategy for India would focus on three sequential stages. First, leverage India’s existing strength in chip design to build a design services ecosystem that serves global semiconductor companies. Second, develop assembly, testing, and packaging capabilities that are less capital-intensive and less workforce-intensive than fabrication. Third, over a 15-to-20-year timeline, develop fabrication capabilities for mature-node chips used in automotive, industrial, and consumer applications. The current strategy, which attempts to jump directly to leading-edge fabrication, risks wasting resources on an unachievable goal while neglecting the genuine strengths that India already possesses in the semiconductor ecosystem.

India is not the only country facing a semiconductor talent shortage. The United States, the European Union, Japan, and South Korea all face similar challenges. The global competition for semiconductor talent is intense and will intensify as more countries seek to build domestic chip industries. The US CHIPS Act includes significant funding for workforce development. The European Union has launched a Semiconductor Skills Academy. India must compete with these established programmes while building its own workforce from a lower base. The competition for talent is as important as the competition for investment in determining which countries succeed in building semiconductor industries.

India’s diaspora of skilled professionals in the global semiconductor industry is a potential asset that the country has not fully leveraged. Thousands of Indian engineers and managers work in senior positions at TSMC, Samsung, Intel, and other leading semiconductor companies. The diaspora could contribute to India’s semiconductor ambitions through investment, mentorship, and knowledge transfer. The government has sought to engage the diaspora through initiatives such as the Semiconductor R&D Fund, but the response has been limited. The diaspora’s willingness to contribute to India’s semiconductor development depends on the country’s investment climate, regulatory environment, and long-term commitment to the sector.

The India Semiconductor Mission offers financial support for companies establishing fabrication facilities, design centres, and assembly and testing operations. The government has committed over $10 billion in incentives, making India one of the most generous destinations for semiconductor investment. The incentives cover a significant portion of the capital costs of establishing a fab. However, incentives alone cannot build a semiconductor industry. The broader investment climate, infrastructure quality, and workforce availability are equally important. India must offer more than money to attract semiconductor investment. It must offer a competitive business environment, reliable infrastructure, and a skilled workforce — none of which can be created overnight or purchased with subsidies.

India’s domestic semiconductor market is one of the fastest-growing in the world, driven by the expansion of the electronics, automotive, and telecommunications sectors. The domestic market could provide a foundation for the development of a semiconductor ecosystem. Chips designed and manufactured in India for the Indian market would not face the same competitive pressures as chips targeted at global markets. The domestic market advantage is genuine, but it is not sufficient to build a globally competitive semiconductor industry. The Indian market, while large and growing, is still smaller than the Chinese, US, or European markets. The domestic market can support the development of a semiconductor ecosystem, but it cannot substitute for global competitiveness.