During a two-day visit to the Netherlands that just concluded, Indian Prime Minister Narendra Modi witnessed the signing of a deal between Tata Electronics — a subsidiary of the multinational Tata Group — and ASML (Advanced Semiconductor Materials Lithography), the Dutch tech giant that dominates the market for lithography machines used in semiconductor manufacturing.
Under the agreement, ASML will supply advanced lithography technology to Tata Electronics for producing 300mm wafers at India’s first semiconductor fabrication plant, to be built in Dholera, Gujarat — the home state of Prime Minister Modi. Tata Electronics plans to invest $11 billion in the project.
The plant is expected to produce chips for sectors including automotive, mobile devices, and artificial intelligence applications. India’s Minister of Electronics and Information Technology, Ashwini Vaishnaw, said the facility will be completed by 2028.
Currently, India imports most of its microchips because it cannot manufacture advanced chips (below 7 nanometers) for AI and smartphone applications. The deal is strategic as ASML, the exclusive supplier of lithography machines for cutting-edge chip production, will help India establish and scale up manufacturing.
Beyond ASML, Tata Electronics has also partnered with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC), a memory chip powerhouse. According to Tata, PSMC will provide access to a broad technology portfolio including 28nm, 40nm, 55nm, 90nm, and 110nm chip manufacturing technologies.
Analysts say the agreement is significant for India on both industrial and strategic fronts. Sujai Shivakumar, Director and Senior Fellow at the Center for Strategic and International Studies (CSIS), commented: “India is looking to build its semiconductor industry around 12nm chips. ASML can provide the equipment needed to produce them. This is an important development for both ASML’s market and India’s domestic manufacturing capabilities.”
Harsh V Pant, Head of Strategic Studies at the Observer Research Foundation in New Delhi, described the deal as one of “the most important semiconductor developments India has seen in recent years.” According to him, it signals a shift in India’s role in the AI economy, “from largely being about software services and AI talent to having a stake in the physical infrastructure behind AI.”
However, experts also pointed out challenges. Shivakumar said the main challenge for India will be “infrastructure,” including reliable and high-quality electricity and water, as well as labor skills at all levels. Earlier, in 2023, Taiwan’s Foxconn withdrew from a $19.5 billion semiconductor joint venture with the Vedanta Group due to delays in government approval of incentives.
The Tata-ASML deal comes as the Modi administration accelerates its AI ambitions. In 2024, India launched the India AI Mission with a budget of $1.07 billion over five years, focusing on expanding access to computing power, supporting research, and startups. In February, the country hosted the AI Impact Summit in New Delhi, attended by heads of state and tech billionaires.
International observers see the agreement as the clearest sign yet that India wants to become a serious semiconductor manufacturing nation, a reliable geopolitical technology partner, and ultimately a player in AI infrastructure — rather than just an AI consumer.
