India's new industrial revolution takes shape across space, chips, data centres and solar
India's industrial policy has converged on four strategic sectors — space, semiconductors, data centres, and solar manufacturing — through a combination of liberalised entry norms, production-linked incentives, tax breaks, and localisation requirements
The space sector has been progressively opened to private participation since 2020, with liberalised foreign investment norms approved in 2024
Large production-linked incentive (PLI) schemes have been extended and expanded for semiconductors, electronics, and solar manufacturing
Tax incentives have been introduced for data centre operators, alongside government-backed procurement of GPUs (graphics processing units) to support domestic AI compute capacity
India Semiconductor Mission and PLI-Based Industrial Policy
The India Semiconductor Mission (ISM) is the government's flagship programme to build a domestic chip manufacturing and design ecosystem, run under the Ministry of Electronics and Information Technology (MeitY) as an Special Purpose Vehicle-style mission. It exemplifies India's post-2020 shift toward outcome-linked fiscal incentives (PLI) rather than blanket import substitution tariffs, as the preferred industrial policy tool.
Key Details
- ISM was approved by the Union Cabinet in December 2021 with an initial outlay of ₹76,000 crore, offering fiscal support of up to 50% of project cost for chip fabs, compound semiconductor units, assembly/testing (ATMP/OSAT) facilities, and chip design
- As of the latest count, 10 semiconductor projects worth about ₹1.60 lakh crore in investment have been approved across 6 states
- Semicon India 2.0, approved by the Cabinet with a fiscal outlay of ₹1,27,500 crore, expands the mission beyond fabrication to indigenous chip design, IP, equipment, materials, advanced packaging, R&D, and talent development
- PLI schemes more broadly (across 14 sectors since 2020, including large-scale electronics manufacturing and IT hardware) link fiscal incentives to incremental sales/investment rather than upfront capital subsidy
The chip manufacturing push described in the article is anchored in the Semiconductor Mission's two-phase incentive architecture (ISM 1.0 → Semicon 2.0), a template Indian industrial policy is now replicating across solar and electronics.
Space Sector Liberalisation — IN-SPACe and FDI Reform
Since 2020, India has progressively opened the space sector value chain — satellite manufacturing, launch vehicles, ground infrastructure, and downstream applications — to private companies, ending the earlier monopoly of ISRO and its public-sector arms. The Indian National Space Promotion and Authorisation Centre (IN-SPACe), set up as a single-window regulator, authorises and promotes private space activities.
Key Details
- Space sector opening announced in May 2020 as part of the broader Atmanirbhar Bharat reform package; IN-SPACe subsequently notified Norms, Guidelines and Procedures (NGP) for private space activities
- FDI policy for the space sector was liberalised in February 2024: up to 74% FDI under the automatic route for satellite manufacturing/operation and data products, 49% for launch vehicles/spaceports, and up to 100% for manufacturing of satellite components and sub-systems
- IN-SPACe has approved over 250 applications from private players for space-sector projects
- NewSpace India Limited (NSIL), a Department of Space PSU, handles commercialisation of ISRO-developed technologies and launch services for private/commercial customers
The article's reference to "opening the space sector to private companies" tracks this 2020-2024 liberalisation arc — from policy announcement, to a regulatory body (IN-SPACe), to a liberalised FDI cap — which UPSC frequently tests as a sequence.
Data Centre Tax Incentives and the IndiaAI Mission (GPU Procurement)
The government's approach to computing infrastructure combines fiscal incentives for physical data centre capacity (tax exemptions) with direct subsidisation of AI compute access (GPU procurement under the IndiaAI Mission), reflecting a dual industrial-policy and digital-sovereignty objective.
Key Details
- The draft National Data Centre Policy proposes a 20-year tax exemption for data centre developers; separately, the government has offered zero tax on revenue from cloud services sold abroad through 2047 if workloads run from data centres located in India
- The IndiaAI Mission was approved by the Union Cabinet in March 2024 with an outlay of ₹10,371.92 crore; it initially targeted 10,000 GPUs and has since onboarded over 38,000 GPUs, made available to startups, researchers, and academia at a subsidised compute rate
- The Mission operates through five pillars: subsidised GPU compute, indigenous foundation models, a national datasets platform, an application development fund, and AI skilling; the government subsidises up to 40% of compute costs for priority use cases such as healthcare and education
- India has also announced an ambition to design an indigenous GPU within three to five years to reduce import dependence
The "purchases of GPUs" referenced in the article are the IndiaAI Mission's compute procurement, which is being paired with data-centre-specific tax breaks to build both the hardware layer (data centres) and compute-access layer (subsidised GPUs) of India's AI stack.
Production-Linked Incentive (PLI) Scheme for Solar PV Manufacturing and ALMM
The National Programme on High Efficiency Solar PV Modules under the PLI scheme is designed to build domestic gigawatt-scale manufacturing capacity across the solar value chain (polysilicon to modules), while the Approved List of Models and Manufacturers (ALMM) is a complementary demand-side localisation tool that reserves government/subsidised project procurement for domestically manufactured modules.
Key Details
- The PLI Scheme for High Efficiency Solar PV Modules was approved by the Union Cabinet in April 2021, with an outlay of ₹24,000 crore, offering incentives for five years post-commissioning based on sales, scaled to module efficiency
- ALMM compliance is mandatory for government-funded and subsidised solar projects, creating a captive domestic market shielded from cheaper non-ALMM (largely Chinese) module imports
- As of mid-2025, India's domestic PV manufacturing capacity stood at approximately 3.3 GW polysilicon, 5.3 GW wafer, 29 GW cell, and 120 GW module — with cell and module capacity built almost entirely by the PLI push
- A structural gap persists: unrestricted imports of polysilicon and wafers alongside restrictions only at the module stage under ALMM, creating asymmetric protection across the value chain
The "localisation requirements" cited in the article map to the ALMM mechanism, while the "large production-linked schemes for solar" refer to this ₹24,000 crore PLI programme — together forming India's twin-track (incentive + mandate) approach to solar manufacturing self-reliance.
- India Semiconductor Mission (2021) outlay: ₹76,000 crore; Semicon India 2.0 outlay: ₹1,27,500 crore
- Semiconductor projects approved so far: 10 projects, ~₹1.60 lakh crore investment, across 6 states
- Space sector FDI caps (2024 reform): 74% (satellite mfg/ops, automatic route), 49% (launch vehicles/spaceports), 100% (components/sub-systems)
- IndiaAI Mission (March 2024) outlay: ₹10,371.92 crore; GPUs onboarded: 38,000+ (against an initial target of 10,000)
- Solar PLI (National Programme on High Efficiency Solar PV Modules, April 2021) outlay: ₹24,000 crore
- India's solar PV capacity (mid-2025): ~120 GW module, 29 GW cell, 5.3 GW wafer, 3.3 GW polysilicon
- Data centre tax exemption proposed under draft National Data Centre Policy: 20 years