India’s journey in the global technology landscape presents a compelling paradox, with a phenomenal success story in scaling its Information Technology (IT) services sector, yet a persistent, decades-long struggle to establish globally competitive compute hardware manufacturing capabilities. This raises a critical question about the future of quantum hardware development in India. To understand this, we will employ a three-layered approach, in which first, we examine the global evolution of compute hardware to identify key success mechanisms related to policy, procurement, capital, and supply chains; next, we apply these mechanisms to the Indian context to understand which of these were absent, weak, or misaligned. And finally, we return to the present and consider quantum hardware today, where it resembles past hardware challenges and what might be different.

Strategic Will and the Road Not Taken

A glance at RBI’s balance-of-payments statistics reveals to us that software exports are the primary offset to India’s persistent merchandise trade deficit [1]. In 1991, when India’s foreign reserves fell under $1 billion, scarcely enough to cover any more than 2 weeks worth of essential imports, leadership was forced to find ways of earning foreign exchange that did not require the capital intensity of manufacturing [2]. Toward this goal was the establishment of the Software Technology Parks of India (STPI), which, in its first year, exported software for just ₹17 crore [3]. By 2025 that figure had grown to ₹10.59 lakh crore [4]. Indeed, India’s relationship with the global compute industry has been, for most of its post-independence history, shaped by scarcity of foreign exchange, of capital, of time.

The choice to prioritise software was embedded into policy in the 1970s. As early as 1972, duty-free imports of computer hardware were permitted on the condition that importers export software worth twice the value [5]. Hardware was positioned not as an industry to be built, but as an input to be acquired in service of software exports. The 1984 Computer Policy and the 1986 Software Policy extended this further [6]. These reforms, along with the establishment of the STPI addressed the binding constraints for cross-border software delivery, which were mainly communications. The binding constraints for hardware, which included scale, logistics, supplier depth, access to equipment, etc., were not addressed with comparable urgency.

India’s signing of the WTO agreement then forced a zero-tariff regime on electronics [7]. Cheap imports flooded the market, were counterproductive for nascent local industries, and discouraged domestic R&D. The Y2K demand shock in 1999–2000 accelerated software exports further still [8]. When a sector becomes both a major employer and a macroeconomic anchor, it attracts policy attention, institutional capacity, and talent pipelines, all of which then do not flow elsewhere.

Hence, India had no operational semiconductor fabrication plant until the Tata-PSMC project was approved in 2024 [9]. The Semi-Conductor Laboratory in Mohali runs an 8-inch 180nm CMOS line and a 6-inch MEMS line, useful for strategic applications, but is decades behind the state of the art [10]. Over 90 percent of the world’s wafer fabrication capacity sits in five economies [11]. India is not one of them.

In the following paragraphs, we look at how compute hardware industries were built in these five economies – United States, Japan, South Korea, Taiwan, China, and even Europe. We focus on semiconductors, embedded and industrial electronics, client devices, and infrastructure systems. By analysing the case studies across these geographies, we identify and delineate a set of nine recurring mechanisms that were essential for the success of their hardware industries. We then apply this framework to the Indian context, assessing how each of these critical mechanisms was either missing, inversely present, or present but isolated from the others.

Mechanism 1: State as Enabler and First Buyer

The first mechanism is the state acting as the first buyer and absorbing high fixed costs before commercial markets exist, thereby creating demand. In the United States, military procurement funded the early growth of IBM, Texas Instruments, Motorola, and Raytheon [12]. In Japan, NTT funded proprietary supercomputer development through its procurement budget, creating guaranteed demand for Fujitsu, NEC, and Hitach [13]. China legally mandated government purchase of domestic servers, bolstering Inspur to becoming one of the world’s largest server manufacturers [14].

Similarly, in India, C-DOT installed its first 128-line rural exchange in 1986 and reached 25 RAX units per day by 1993, supported by captive government demand [15]. BEL served as a defence electronics anchor buyer. The Semi-Conductor Laboratory, operational from 1983, provided end-to-end fabrication and testing for DRDO and ISRO [16]. However, what mattered is that state-led procurement cascaded into commercial markets. American military procurement of semiconductors created volume that spilled into commercial computing and consumer electronics [17]. For BEL, demand stayed inside the MInistry of Defence, and SCL’s output served strategic programmes but never generated the volumes required to reduce the costs.

Mechanism 2: Patient Capital

Every successful hardware economy developed an institutional form, different in each case, that provided capital tolerant of long hardware development timelines. Germany’s Mittelstand supported long-term lending through regional banking relationships [18, 19]. Japan’s Keiretsu provided guaranteed demand, allowing suppliers to invest in capital-intensive R&D without short-term shareholder pressure [20]. Taiwan’s stock denomination rules made venture capital structurally impossible, so the state became the risk-bearer [21]. SEMATECH pooled roughly $850 million each from government and industry [22]. In South Korea, the state nationalised the banking sector and directed heavily subsidized capital to the chaebols, effectively shielding them from the risk of bankruptcy during the highly capital-intensive phases of establishing heavy industries and, subsequently, advanced electronics manufacturing [23].

In India, however, following the 1989 fire that damaged SCL’s fabrication facility, the state normalised imports rather than rebuild [24]. Rock’s Law holds that each generation of fabrication equipment costs roughly twice the preceding one [25]. Missing a generation raises the capital threshold required to re-enter in the next cycle. When the India Semiconductor Mission launched in 2021 with ₹76,000 crore, the cost structure had already moved far beyond what rebuilding SCL would likely have taken in the early 1990s. India’s venture ecosystem had evolved around software, where cycles are shorter and capital requirements lower. Hardware lacked institutional forms capable of supplying patient capital over long horizons.

Two preconditions for patient capital to matter were also missing. India’s gross R&D expenditure has remained between 0.6 and 0.7 percent of GDP for over three decades, the lowest among major economies,. The private sector contributes only 36 to 41 percent, compared with 75 to 80 percent in the United States, China, and South Korea [26, 27]. Even where public research produced capability, like in DRDO, ISRO, BARC , results rarely translated into commercial production. The pipeline from research to product remained weak.

The second is physical infrastructure. Economies that built semiconductor industries invested heavily in infrastructure before or alongside their hardware pushes. India’s investments are increasing, but from a lower base and a later moment in the cycle.

Mechanism 3: Government-driven Consortia

The third mechanism is R&D consortia, which are government-organised arrangements that allow competing firms to pool resources too costly for any single firm to pursue independently. Japan’s VLSI project mobilised roughly 70 billion Yen and coordinated research across NEC, Toshiba, Hitachi, Fujitsu, and Mitsubishi, helping position Japan to capture roughly half the global semiconductor market by 1986 [13]. In response, the US convened SEMATECH in 1987, with government and industry each contributing roughly $850 million over eight years [22]. Taiwan’s ITRI Notebook PC Consortium brought 46 manufacturers under a standardised division of labour with shared component architectures and patent cross-licensing [29].

India developed no comparable mechanism. Research was distributed across DRDO, C-DAC, ISRO, and individual IITs, each under separate mandates. Intellectual property remained institutionally siloed, and cross-firm technology pooling did not emerge. Recent initiatives gesture toward a consortium model — the T-Hub framework under the National Quantum Mission, ISM 2.0’s proposals for semiconductor equipment — but whether these evolve into genuine pre-competitive consortia or remain collections of parallel grant-funded projects will determine their impact.

Mechanism 4: Tech Transfer through Foreign Partnerships

The fourth mechanism is structured technology transfer through foreign partnerships. ITRI absorbed semiconductor technology through state-funded licensing, refined it through applied research, and transferred it systematically to private firms [29]. TSMC was spun out of ITRI with technology licensed from Philips [29]. Samsung licensed DRAM technology from Micron and Sharp [30]. China made technology transfer a condition of market access [31].

In India, BEL established collaborations with Philips and RCA, including the transfer of mask drawings, design documentation, and processing know-how which was renewed in 1981 [16]. Yet the resulting capabilities remained within BEL. No mechanism existed to transfer knowledge outward to private firms, until the success in the space industry, with ISRO demonstrating technology transfers to various industries [32]. Multinational subsidiaries such Siemens India, ABB India, Rockwell India operated as extensions of parent companies, with technology residing within global corporate structures rather than in Indian-owned firms.

Mechanism 5: Mergers and Acquisitions

The fifth mechanism is mergers and acquisitions as a tool of capability acquisition. Schneider Electric built its automation portfolio through acquisitions of Telemecanique, Square D, and Modicon [33]. Rockwell acquired Allen-Bradley for $1.65 billion [34]. Lenovo’s purchase of IBM’s PC division transformed it into the world’s largest PC producer within a decade [35]. In each case, the acquiring firm possessed sufficient absorptive capacity to deploy what it purchased.

Indian conglomerates have undertaken large international acquisitions, with Tata Steel’s purchase of Corus most prominently, but these did not target compute hardware capability. The dominant pattern has been the reverse, with foreign firms entering India, rather than Indian firms acquiring technological assets abroad.

Mechanism 6: Workforce and Vocational Training

The sixth mechanism is workforce and vocational training systems producing the specialised labour required for hardware manufacturing. Germany’s dual system produces technicians alongside engineers [36]. Japanese keiretsu trained workers internally through long-term employment [37]. Taiwan’s ITRI functioned as a revolving door for semiconductor talent [29].

India developed strength in chip design but not manufacturing skills. Texas Instruments’ Bengaluru design centre, established in 1985, became one of the most productive in the company’s global network [38]. But design expertise does not substitute for fabrication capability. India produced far fewer process engineers, fabrication technicians, and clean-room operators than it did software engineers and chip designers. The Chips-to-Startup programme aims to train 85,000 engineers, but its emphasis remains on design rather than fabrication [39].

Mechanism 7: Strategic Use of Technical Standards

The seventh mechanism is technical standards. Countries that shape standards often shape the market itself. Germany’s DIN and VDE systems established specifications aligned with German manufacturing capabilities [40]. South Korea licensed CDMA technology primarily to domestic firms, shielding Samsung and LG during a formative phase [41]. Safety and certification standards, like UL, CE, ISO 26262, IEC 61508 operate as effective barriers to entry [42]. More generally, standards like The Digital Living Network Alliance (DLNA) have had a profound influence on how consumer electronics interact, and therefore how the companies producing these products evolve [43].

Despite seeing success, the electronics industry never saw the scaling of products in India, due to which defining and contributing to standards was not prioritised.

Mechanism 8: Trade Agreements and Geopolitical Instruments

The eighth mechanism is trade agreements and geopolitical instruments. Japan’s Dodge Line contraction in 1949 forced firms to build in-house capability [44]. The US-Japan Semiconductor Trade Agreement of 1986 forced Japan to curb dumping [45]. The CHIPS Act directed $52 billion toward reshoring fabrication [46]. Export controls on EUV lithography have blocked Chinese access to the most advanced manufacturing tools [47].

India remained largely outside this architecture. When it joined the WTO Information Technology Agreement in 1997, it committed to zero tariffs on finished IT products by 2005, but duties on components were not reduced in parallel [48]. The result was an inverted duty structure: importing a finished laptop was cheaper than importing its parts and assembling it domestically [49]. The Economic Survey of 2026 identified inverted duties as a major obstacle to domestic competitiveness [50].

Geopolitics affected hardware and software differently. C-DAC was established in 1988 in response to the US denial of Cray supercomputers [51]. After the 1998 nuclear tests, sanctions restricted access to dual-use hardware and advanced components [52]. Software services, delivered digitally, were largely unaffected.

Mechanism 9: Clustered Supply Chains

The ninth mechanism is clustered supply chains with vertical depth. Successful hardware industries emerge from dense networks of specialised suppliers whose proximity reduces coordination costs and accelerates innovation, for example Hsinchu, Shenzhen, Germany’s Mittelstand networks, Japan’s keiretsu structures. The advantage arises not from co-location alone but from a well-populated supply chain at every stage, each supplier sustained by the presence of the others.

India possesses industrial clusters but they lack comparable vertical integration. The mobile phone industry illustrates the limitation. Micromax, Lava, and Karbonn captured substantial market share in the early 2010s, but their products were largely Chinese ODM platforms rebranded for India [53]. A domestic supplier base for displays, batteries, or PCB assemblies did not develop beneath them. When Chinese manufacturers entered directly, Indian brands lacked a supporting ecosystem. Without local component suppliers or design capability, they could compete primarily on marketing and distribution. Once that advantage disappeared, the firms declined rapidly.

Mechanism 10: Policy stability 

Policy instability compounded the constraints that impeded the development of compute hardware in India. For instance, in the mid-2000s, a proposal for an Intel fabrication plant collapsed after the government failed to introduce a semiconductor investment policy in time [54]. By 2022, ISM had attracted proposals from Vedanta-Foxconn, IGSS Ventures, and ISMC. All three stalled. In 2024, the scheme was revised to prioritise mature-node fabrication, effectively disqualifying applicants committed to more advanced processes [55, 56]. A fabrication facility requires five to seven years from announcement to production. When policy frameworks change during that period, firms redirect investment to jurisdictions where conditions remain stable.

Mechanisms in the quantum context

While quantum is nascent, the mechanisms listed above, that historically built classical hardware industries are already visible in quantum.

On state procurement: The US Department of Energy has committed $625 million to five national quantum research centres [57]. IonQ holds a $40 million contract with the Department of Defense to develop networked quantum systems [58], while the Pentagon has requested an additional $75 million for a Quantum Transition Acceleration initiative [59]. China integrated processors developed by Origin Quantum into its national supercomputing network in April 2024 [60]. Japan procured a QuEra neutral-atom quantum computer through a $41 million contract at AIST, and Quantinuum’s “Reimei” system became operational in Japan in February 2025 [61]. The European Union, through EuroHPC, is procuring six quantum computers to be integrated into existing supercomputing infrastructure across member states [62]. These programmes function as early demand signals, playing the same role that defence and telecommunications procurement once played for the semiconductor industry. In India, state-level demand is also emerging; in March 2026, the Karnataka government procured and installed a 25-qubit quantum computing system from domestic startup QpiAI at IIIT-Dharwad under its Local Economy Acceleration Programme [83].

On patient capital: China has launched a government-backed fund worth roughly 1 trillion yuan ($138 billion) targeting frontier technologies including quantum computing [63]. Japan’s Q-STAR consortium, founded by Toyota, NEC, Hitachi, Fujitsu, and Toshiba, has expanded to more than 100 members and is backed by approximately $7.4 billion in public funding, with the government designating 2025 as the “first year of quantum industrialisation” [64]. In the United States, PsiQuantum raised $750 million in private funding alongside roughly $620 million AUD in Australian government support to build manufacturing capacity in Brisbane [65]. European governments have launched comparable initiatives: Germany has earmarked €2 billion for quantum technologies, France has committed €1.8 billion, and the Netherlands has pledged €615 million through Quantum Delta NL. India’s National Quantum Mission allocates ₹6,003.65 crore [66]. In domestic terms this represents a significant commitment, but internationally it is modest, roughly one-thirtieth of Japan’s programme and far below China’s estimated cumulative quantum spending .

On technology transfer and industrial consortia: Australia committed approximately $1 billion to attract PsiQuantum to Brisbane, pairing financial incentives with requirements for local supply chain development and workforce training [67]. Japan’s Q-STAR consortium is explicitly organised as an industry collaboration, with METI coordinating development across hardware, middleware, and operating systems [64]. The European Quantum Industry Consortium, founded in 2021, links hundreds of small firms, large corporations, investors, and research institutions [68]. India’s collaborations remain primarily research partnerships. Samsung Semiconductor operates a Quantum Technology Lab, and the INOX Group has established a quantum materials laboratory at IISc 69. These initiatives contribute to scientific research but do not yet function as industrial technology transfer mechanisms comparable to the arrangements that spun TSMC out of ITRI or supported PsiQuantum’s emerging supply chain in Australia. However, domestic consortiums are actively working to bridge this gap. QETCI has launched several cross-border initiatives to integrate India’s supply chain globally, including a late-2025 partnership with the India Global Forum to map a UK-India quantum value chain and a joint framework with the Netherlands to accelerate bilateral commercialisation [70].

On workforce development: Globally, the quantum labour shortage is severe. The White House has described it as a national security concern [71]. Estimates suggest roughly one qualified candidate exists for every three open positions [72]. The global quantum workforce numbers around 30,000 today, while projected demand could exceed 250,000 by 2030 [73]. The shortage is not concentrated among theoretical researchers. It is most acute among cryogenic technicians, radio-frequency engineers, fabrication specialists, and systems integration engineers. India’s National Quantum Mission includes workforce initiatives, and institutions such as IISc, IIST, DIAT, and IISER Pune now offer specialised degree programmes [74]. But graduate programmes primarily produce researchers. The skills gap lies in operational roles, for instance engineers who maintain dilution refrigerators, assemble cryogenic wiring, and characterise qubit devices. Developing this workforce could represent one of India’s most practical opportunities for differentiation.

On standards: Technical standards for quantum technologies are being written now. ISO and IEC have established Joint Technical Committee 3 for quantum technologies [75]. China’s Ministry of Industry and Information Technology released a 2024 framework emphasising national leadership in quantum standards development [76]. The European Union is introducing new regulatory classifications for emerging technologies under its dual-use export regime [77]. IEEE has launched multiple working groups addressing quantum architectures and interfaces [78]. India appears to have limited participation in these processes. This matters because standards shape markets. India entered the semiconductor industry after most global standards were already defined. Quantum technologies remain in an earlier phase. The window for participation still exists, but it will not remain open indefinitely.

On clustered supply chains: The Netherlands provides a clear example. The Delft quantum ecosystem, centred around QuTech and TNO, now includes QuantWare for quantum chips, Qblox for control electronics, Orange Quantum Systems for calibration, and Delft Circuits for cryogenic cabling [79]. The result is a vertically integrated quantum computing stack concentrated within a single regional cluster. China is building a similar ecosystem in Hefei, where the “Quantum Avenue” district expanded from roughly 90 quantum-related firms in 2023 to more than 150 by 2024 [80]. Origin Quantum has begun manufacturing domestically produced dilution refrigerators, partly in response to export restrictions on equipment produced by Oxford Instruments in the United Kingdom [81].

On trade policy and geopolitics: Between 2024 and 2025, the United States, the United Kingdom, and the European Union introduced export controls covering quantum computers, cryogenic equipment, and associated components [82]. Exports to China face a presumption of denial. These controls are coordinated among allied economies, with exemptions typically extended to countries that maintain compatible export-control regimes. India occupies an ambiguous position within this framework, since it not subject to the most restrictive controls, but it is also not currently part of the core export-control alignment that includes the United States, the United Kingdom, Japan, Canada, Australia, and the European Union.

Conclusion

The central question for India’s quantum effort is therefore institutional rather than scientific. The underlying research capability exists. What remains uncertain is whether the broader ecosystem will continue to emerge and proliferate. The six-qubit processor demonstrated in 2024 and the National Quantum Mission budget represent genuine progress. But India has seen similar moments before. The Semi-Conductor Laboratory possessed meaningful capabilities in the early 1980s, and the ₹76,000 crore India Semiconductor Mission launched in 2021 attracted proposals that later stalled. In both cases the limiting factor was not scientific knowledge but institutional coordination. The same question now applies to quantum computing: whether India will build the system around the science that allows the technology to truly advance in the country.