With artificial intelligence dictating a tech-fuelled future, India is in major catch-up mode. Just last night, IT & electronics minister Ashwini Vaishnaw declared that India will come with its own generative AI foundational model within months at what would be the cheapest cost on the planet.

Now, the race to develop the chips that will power India’s own AI revolution is on in right earnest. And perhaps this budget will have a role to play.

ALSO READ | Union Budget 2025: Will the budget fulfil the wishes of gems and jewellery players?

“India’s semiconductor market is poised to cross $100 billion by 2030, with this budget expected to play a key role in shaping local manufacturing. Industry remains hopeful that additional support for R&D and local manufacturing will strengthen the domestic ecosystem,” said Shivaji, senior analyst at the tech consultancy Counterpoint Research.

Already, last year’s budget kicked off a 76,000 crore production-linked incentive for manufacturing semiconductors in the country. And the results have been impressive. Despite some false starts from the likes of Vedanta, the semiconductor facility in Gujarat’s Dholera, being developed by Tata along with chip giant TMSC of Taiwan is coming along nicely and it is expected that production will commence by the end of next year.

Not bad for a nation that was virtually zero in chip manufacturing.

Now, the question is what the 2025 budget can do. Research & development is India’s Achilles heel, but not because of a lack of know-how. All it takes is investment and the right upskilling, what with India’s vast and talented pool of engineers and designers. Could the budget have provisions for stoking this? A recent report had cited that India will see a deficit of up to 3 lakh semiconductor professionals in two years’ time.

ALSO READ | Union budget 2025: What does the MSME sector want?

However, analysts caution the over-focus on just one aspect, manufacturing semiconductors, and instead suggest a holistic look at the entire supply chain. 

“In addition to funding ATMPs and fabs, the government should also incentivise compound semiconductor initiatives, which are crucial for automotive, power electronics, and green energy—sectors critical to India’s technological future,” added Shivani, pointing out how Budget 2025 has a crucial role to play — “The semiconductor industry also expects increased investment in skill development and R&D funding, which would further accelerate innovation, empower the workforce, and attract foreign companies, positioning India as a competitive global hub.”