Volume VI Special Issue IV April 2026

Name of Author : Rosemary K Biju

Title of the paper : THE MULTIPLIER EFFECT OF SEMICONDUCTOR INVESTMENTS ON INDIAS STRUCTURAL TRANSITION

Abstract: It is said in the semiconductor world that oil was black gold, but chips are digital diamonds. The last century was shaped by oil, but the power of the 21st century is concentrated in a small chip. are the words used to explain the high value of semiconductors by prime minister Narendra Modi at Semicon India. To shape the 21st century of our nation, India had ₹1.60 lakh crore in cumulative investment commitments in the semiconductor sector. This investment can catalyse the structural transition of the macroeconomic factors of these industries. This paper examines the multiplier effect of semiconductor investments on Indias structural transition focusing on ₹1.60 lakh crore cumulative investment and launch of ISM 2.0 in union budget 2026 to 27 industries on employment generation and the backward and forward linkages. In this paper structural transition means the transformation of semiconductor sector from low productivity sector to high productivity sector and shift towards high tech manufacturing in the sector. The methodology of this paper utilizes Keynesian multiplier effect to analyse investment effect and employment effect in the Indian economy and the study employs a descriptive and analytical approach, utilizing high frequency indicators from MOSPI to assess sectoral inter linkages. This paper argues that semiconductor investments can create high economic multiplier by forward and backward linkages in manufacturing and service sector and thereby accelerate the structural transition towards a high tech manufacturing hub. The ₹1.60 lakh crore as cumulative investment commitment and the 9.13% growth in Manufacturing GVA boost Indias progress toward the Viksit Bharat 2047 objectives.

Keywords : Indian semiconductor mission, Keynesian multiplier effect, structural transition, backward and forward linkages

DOI :

Page Number : 246-250