For decades, India has built formidable strength in engineering services and chip design. Global majors – from Qualcomm to Intel – operate large R&D centres in Bengaluru, Hyderabad, and Noida. Indian engineers contribute to some of the world’s most advanced chips. Yet, the ownership of those designs – the patents, architectures, and licensing rights – largely resides outside the country.
This is the imbalance that IT minister Ashwini Vaishnaw has repeatedly highlighted: India powers innovation, but does not always profit from it. Design services without intellectual property (IP) ownership are akin to leaving the most valuable part of the value chain on the table. In the semiconductor industry, IP ownership ultimately determines where long-term value, strategic leverage, and ecosystem resilience lie.
To address this, the government has begun shifting its focus. Its push into semiconductor manufacturing – backed by initiatives such as the Design Linked Incentive (DLI) scheme – is aimed at promoting indigenous IP and moving beyond assembly-led participation. Yet beneath this policy momentum lies a more structural question: can India truly move from participation to ownership in the global semiconductor value chain?
The challenge is not one of talent. India has a vast pool of highly skilled engineers. The issue lies in how that talent is deployed. Much of it continues to be channelled into services-led models that prioritise predictable, short-term revenues over long-gestation innovation. “India must move beyond this comfort zone toward long-term wealth creation through product innovation, semiconductor IP, and India-owned brands,” says Ashok Chandak, president of IESA and SEMI India.
The economics of the semiconductor industry make this urgency clear. Globally, pure manufacturing captures just 5-10% of the value. Design and IP account for 20-30%, while brands and system companies command more than 50%. Without IP ownership, India risks remaining confined to lower-value segments of the chain, regardless of its engineering prowess.
Value Gap
Encouragingly, government support is beginning to catalyse change. Incentive schemes and semiconductor missions are nudging companies to think beyond execution. “Moving up the value chain requires a shift from execution to invention,” says Jayashankar Narayanankutty, group director, Cadence Design Systems. However, significant gaps persist – particularly in risk capital for deeptech IP, availability of system-level architects, and collaboration between academia and industry.
Building IP is inherently capital-intensive and uncertain. It demands patient investment, product thinking, and a willingness to take calculated risks – areas where Indian firms have traditionally been cautious. Bridging this gap will require not just policy support, but a cultural shift in how innovation is pursued and funded.
Equally critical is the demand side. For India to own semiconductor IP, it must also cultivate a robust domestic market. Arjun Malhotra, co-founder of HCL and EPIC Foundation, argues that India now has the scale to design market-specific products for domestic consumption. Embedding functional algorithms into IP-specific integrated circuits (ICs), he suggests, becomes a natural progression rather than a leap. This is how countries like Taiwan, South Korea, and Israel built their semiconductor ecosystems – by aligning innovation with domestic demand.
In India’s case, the government itself can play a catalytic role. As the largest buyer of electronics – across defence, railways, power, telecom, and healthcare – it has the ability to create a reliable market. If public procurement policies mandate, co-fund, and commit to volume offtake of India-designed semiconductors, it could significantly de-risk private investment in IP. As Malhotra puts it, this is not a subsidy model, but a market-creation strategy – one that mirrors the role played by institutions like DARPA in the United States.
Another structural constraint lies in talent distribution. While India produces a large number of engineers, there is a relative shortage of system-level architects and product leaders – roles that are critical for IP creation. According to Sanjeev Kumar Gupta, CEO of the Karnataka Digital Economy Mission, addressing this gap will require targeted incentives for long-gestation IP development, stronger academia-industry collaboration, and a more vibrant deeptech startup ecosystem.
Markets, Mandates, and Architects
At the same time, India must address what industry leaders describe as the “missing middle” – the layer between foundational research and large-scale manufacturing. This includes limited long-horizon R&D investment, too few system-level product roles, and weak linkages between academic research, startups, and manufacturing ecosystems. “We refer to this as the missing middle,” says Avi Avula, president, Applied Materials India. Without strengthening this layer, India risks remaining concentrated in lower-margin segments despite its undeniable strengths.
India stands at a pivotal moment in its semiconductor journey. It has the talent, an expanding domestic market, and increasing policy support. What it now needs is a decisive shift in mindset – from services to products, from participation to ownership, and from capability to control.
As Malhotra succinctly puts it, IP is created when engineering ambition meets market scale and procurement commitment. For perhaps the first time, India has all three. The question is whether it can bring them together – at speed and at scale – to claim its rightful place in the global semiconductor order.