Govt may turn security concerns into a market for India-designed chips
New Delhi: The government could use its buying power and national security requirements to create a market for India-designed semiconductor processors, potentially becoming an anchor customer for startups that are struggling to find commercial clients, a senior government official told Mint on Tuesday.
The official cited CCTV cameras as an example, where security concerns over foreign equipment have created an opportunity for India-designed chips.
“We never intended that the measures we originally took on CCTV cameras, which were oriented towards security requirements, would create a market for India-designed chips for CCTV cameras, but it ended up creating those conditions,” said the official, requesting anonymity since discussions on the Semicon 2.0 incentive scheme and Semicon India 2026 conference are both ongoing.
Such opportunities could allow the government to act as an anchor customer for young chip companies, helping them generate revenue and establish commercial credibility, the official said.
“Clearly, we’re an anchor customer in CCTVs by complying with India’s legal framework. Similar things can be done in licensed sectors such as telecom, where you want chips to come from trusted, valued sources. Finally, there will be national security requirements in non-licensed fields in various strategic areas—all of these can boost the creation of a market for Indian chip companies.”
That could be significant for India’s chip startups, which have struggled to get their designs into commercial deployment.
“Customers are very valuable for semiconductor startups because the biggest barrier is not technology or innovation, but moving from proof of concept to a product, the first commercial deployment, and then scaling up,” said Ashok Chandak, president of industry body India Electronics and Semiconductor Association (Iesa).
“This is where government orders or public-sector purchases can be important,” Chandak said. “They provide revenue validation, help startups validate their proofs of concept, and give other customers greater confidence.”
The CCTV market offers a glimpse of how such demand can be created. China-based CCTV makers Hikvision and Dahua recently failed to obtain mandatory security certification from the Centre’s safety certification body, Standardisation Testing and Quality Certification (STQC), creating room for homegrown firms to step in.
According to Chandak, aerospace, defence and telecommunications could offer similar commercial opportunities for Indian chip startups, where the government can specify requirements or impose restrictions based on strategic or security considerations.
On 16 August, Mint reported that beyond initial seed funds and early design concepts, India’s chip firms have struggled to raise large funds, or move to production stages with commercial clients.
Meanwhile, the 2026 edition of the Semicon India conference will be hosted by Meity on 17 September. More than 240 international companies are expected to participate. Delegations are expected from Japan, Korea, Singapore, Germany, the US, and the Netherlands, among others.
According to the government, the conference will also have one roundtable chaired by PM Narendra Modi on 16 September featuring a select list of chief executive officers from top firms.
The Centre’s anchor-client plan comes as India awaits the framework for investments under the Semicon 2.0 initiative. The five-year, ₹1.28-trillion scheme seeks to incentivize the creation of chip fabs and a semiconductor supply chain in India.
The India Semiconductor Mission, the ministry of electronics and IT (Meity) body overseeing the initiative, has also proposed an equity-linked funding mechanism under which startups could raise partial funds from the Centre, with an option to buy back the equity later.
While the scheme’s contours are awaited, guidance on how private firms may leverage homegrown opportunities to scale revenue show that opportunities for local chip designers could rise in the long run. Near-term challenges, such as long waits for access to fabrication lines, could hamper innovation as well, industry stakeholders said.
