Singapore–India partnership to ‘chip-in’ for semiconductor excellence (2025)

By Vivek Kathpalia, SR Patnaik, Shambhawi Mishra and Sanya Singh

Singapore holds a significant global presence in the semiconductor market, playing a crucial role in supply chain and has established itself as Southeast Asia’s leading hub for wafer production and chip manufacturing. It boasts several state-of-the-art fabrication plants, large wafer foundries, and has carved a niche for itself in advanced manufacturing and R&D. Malaysia, Philippines and Vietnam are not far behind either. With state-of-the-art fabrication plants and a strong emphasis on R&D and advanced manufacturing, Singapore contributes 5% of global wafer capacity, 20% of semiconductor equipment production, and 10% of total global semiconductor output. The city-state is now home to one of the most complete semiconductor ecosystems worldwide, encompassing both front-end and back-end manufacturing.

Meanwhile, Malaysia, Vietnam, and the Philippines are emerging as significant regional players in the sector.

India’s Growing Demand

Semiconductors have become a strategic priority for India. With rising demand across sectors such as smart devices, EVs, defence, navigation, and AI, India’s semiconductor imports surged by 18.5% in FY 2023–24. Currently, India imports around 90–95% of its semiconductors and electronic components, primarily from countries like China, Malaysia, Taiwan, Singapore, and Thailand. Singapore alone exported electronic components worth $4.68 billion to India in FY 2024–25.

As India’s consumption increases, so does its reliance on outsourced wafer manufacturing. While India benefits from a large workforce and lower labour costs, the lack of advanced manufacturing skills and infrastructure hinders front-end manufacturing development. It is critical for India to reduce its import dependency and strengthen its domestic ecosystem. Singapore offers a unique opportunity to support this transformation through its expertise in advanced manufacturing and workforce training.

Mutual Opportunities

Singapore faces rising operational costs, a tightening labour market, and the impact of global trade tensions. With countries shifting towards onshoring, India emerges as a stable alternative under the “China +1” strategy. India can offer skilled and cost-effective talent for back-end manufacturing to support Singapore’s operations.

The two countries are increasingly aware of their mutual value. In September 2024, a Memorandum of Understanding (MoU) was signed during the second India–Singapore Ministerial Roundtable (ISMR), outlining strategic cooperation in semiconductors. The MoU focuses on both government-to-government cooperation (between Singapore’s Ministry of Trade and Industry and India’s Ministry of Electronics and Information Technology) and business-to-business collaboration (between Enterprise Singapore and India Semiconductor Mission).

Bilateral Collaboration

Foreign interest in India’s semiconductor market is growing. Big semiconductor players have announced upcoming investments in India’s semiconductor sector. In 2023, India welcomed a significant investment of approx. $2.75 billion from the American semiconductor giant, Micron Tech, which has set up a semiconductor manufacturing facility in Gujarat. This is considered to be Micron’s largest investment yet.

In 2024, Tata Electronics and ASMPT Singapore have signed an MoU to collaborate on establishing semiconductor equipment infrastructure and solutions. Tata Electronics is also in collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corporation to establish a semiconductor fab in Gujarat, at an investment of about $11 billion. Another noteworthy development, a semiconductor R&D facility being set up by Samsung Semiconductor India Research, in Bengaluru.

In January this year, Singapore’s PTW Group, has signed an MoU with Bartronics India to set up production, refurbishing and training facilities in India.

The computer software and hardware sector is already one of the top 5 sectors receiving the highest foreign direct investment in India. Now, India’s semiconductor market, valued at $52 billion in 2024-25, is projected to grow to $ 103.4 billion by 2030, securing approximately 8-10% of the global market share. India’s commitment to sustainability reflects from its capacity ranking of having the 4^th largest renewable energy capacity in the world. Adding appeal to Singapore’s aim of setting up net zero industrial parks in India.

Policy Support and Incentives

To promote semiconductor self-reliance, the Indian government has launched the India Semiconductor Mission (ISM) under the Semicon India Programme, with an outlay of Rs 76,000 crore (approx. $8.7 billion). The initiative supports all phases of chip production — from design and fabrication to assembly, testing, and packaging.

Key features include:

* Financial subsidies of up to 50% of project costs for infrastructure, R&D, land acquisition, and technology transfer.

* Non-financial support such as dedicated industrial parks, single-window clearances, and workforce development programmes.

In addition, the SPECS scheme (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors) provides a 25% capital expenditure incentive on a broad range of electronics, including display and semiconductor units.

States like Gujarat and Uttar Pradesh have also launched dedicated semiconductor policies offering extra benefits — including subsidies on land, electricity, water, and stamp duty, along with expedited approvals.

Progress and Job Creation

In the year gone by, the Indian government approved 4 semiconductor manufacturing units under the Semicon Programme. Another 9 projects were approved under the SPECS Scheme with a total proposed investment of approx. $900 million which are expected to generate 15,710 jobs in India. These include applications by seasoned enterprises like Tata Electronics, TDK India, and Motherson Electronics. The government is set to approve the next batch of applications as part of the Semicon Programme, including HCL-Foxconn’s outsourced semiconductor assembly and test (OSAT) joint venture facility.

Budget 2025: Accelerating Momentum

The Union Budget of 2025 reaffirmed India’s semiconductor push, increasing allocations to semiconductor projects by 83% and nearly doubling funds for fabrication units. The Production Linked Incentive (PLI) scheme for mobile phones also saw a 55% budget increase.

Furthermore, to attract non-resident investment in the Electronics System Design and Manufacturing (ESDM) sector, the government has proposed a simplified tax regime. From FY 2025–26, non-resident entities supplying ESDM-related services or technologies to eligible Indian companies can opt for presumptive taxation at 25% of turnover, reducing their effective tax rate to below 10%. This allows them to avoid complex tax filings and ensures certainty and ease of doing business.

Looking Ahead

India’s vision of becoming a global semiconductor hub is quickly taking shape. With continued focus on advanced manufacturing, policy incentives, and deepening bilateral ties with strategic partners like Singapore, the country is well-positioned to reduce dependency on imports, build a skilled workforce, and attract long-term investment.

Early movers in India’s semiconductor sector — both domestic and foreign — are likely to benefit from first-mover advantages as India transforms into a critical node in the global semiconductor value chain.

(The authors - Vivek Kathpalia, (Managing Director & CEO - Singapore); SR Patnaik, Partner (head – taxation); Shambhawi Mishra, Principal Associate and Sanya Singh, Senior Associate - Cyril Amarchand Mangaldas.)

Views are personal, and do not represent the stance of this publication.