Introduction: Launching a Fab or OSAT line in India? Don’t let a blocking patent stall a $1B plant.
India is no longer building semiconductor capacity in theory. Under ISM 1.0, 12 projects with cumulative investment exceeding ₹1.64 lakh crore have been approved across six states: fabs, compound-semiconductor units, ATMP and OSAT lines. Micron, Kaynes, and CG Power’s unit have already entered commercial production. ISM 2.0, Cabinet-approved in July 2026, has now added a further ₹1,27,500 crore outlay, with government support running up to 50% of eligible project cost.
Capital, incentives, land, and talent are lining up faster than at any point in India’s semiconductor history.
There is one variable this momentum does not fix on its own: whether the technology you are about to manufacture is actually clear to make, use, and sell in India.
That question has a name: Freedom to Operate (FTO). For a fab or OSAT line, it belongs at the architecture freeze stage, before land is committed, the joint-venture agreement is signed, or the incentive application is filed, treating it as a formality to tick off right before launch is exactly how it turns expensive.
Why FTO gets treated as an afterthought and why that’s expensive
Most global entrants commission FTO reviews the way they commission insurance: after the decision is already made. By the time a blocking patent surfaces during commercial launch, the choices left on the table are narrow and expensive, a redesign against a locked capex plan, or a licensing negotiation conducted under deadline pressure with a supplier who knows exactly how much leverage they have.
The Pre-Fab FTO Checklist
Before the term sheet, not after, a global entrant establishing manufacturing or assembly capacity in India should be able to check off the following:
- Technology mapping and white space study for India specific. Global FTO clearance does not automatically translate to India clearance. Commission a landscape study scoped to the Indian filing base – packaging methods, thermal management, yield-improvement techniques, and test procedures are currently where the highest-value, least-contested claims sit, both globally and within India.
- Claim by claim FTO opinion at architecture freeze. Not at launch, and not at first customer shipment either. The opinion needs to land before the process flow, equipment specification, or packaging architecture is locked in, so a conflict shows up as a design input rather than a design casualty.
- Competitor and NPE patent monitoring, not a one-time search. Patent filings in Indian semiconductor design, packaging, and RISC-V-adjacent IP have grown sharply. An FTO position confirmed today can erode within a filing cycle. Build ongoing monitoring into the compliance calendar, not a single point-in-time check.
- A design-around plan for every identified risk, priced before it’s needed. Where a blocking claim is found early, redesigning around it is almost always cheaper than a license. Know which claims are redesign-able and which aren’t before you need the answer under pressure.
- A licensing and cross-licensing fallback, structured in advance. Near-total freedom to operate is rarely achievable in a crowded technology area. Where litigation or design-around isn’t viable, know your licensing model going in: running royalty for high-volume consumer chips, lump-sum for custom or India-specific designs. Build in audit rights from day one rather than adding them at renewal.
- Export control classification run in parallel, not sequentially. A technology transfer underlying your India entry can simultaneously trigger US EAR/ITAR obligations and India’s own SCOMET regime. FTO clearance and export control clearance need to move together, because a technology that’s clear to use may still not be clear to transfer.
- Trade secret protection layered alongside the patent strategy. India has no standalone trade secrets statute, protection is built through contract, not registration. Process recipes, calibration data, and yield-optimization know-how are often better protected as trade secrets than patents, since patenting requires the kind of public disclosure a future partner (or competitor) can read from the day of grant.
The India litigation reality that should shape your risk appetite
FTO strategy in India has to be built around how enforcement actually plays out here, not how it plays out in the US or Europe. Infringement proceedings can extend over multiple years at first instance. Interim injunctions are available, but not guaranteed. Damages awards have historically run more conservative than US benchmarks.
That reality shifts the calculus. For many global entrants, a strong licensing or design-around posture is the more rational response to a discovered conflict than a litigation-first strategy, and it’s worth choosing that path deliberately rather than defaulting to it once a dispute lands on your desk.
Where this actually goes wrong
In practice, we see the same three gaps recur across fab, ATMP, and OSAT entries:
- FTO commissioned after the manufacturing agreement is signed, not before
- FTO scoped globally but never re-run against the India-specific filing landscape
- Export-control classification treated as a separate workstream instead of a parallel gate on the same technology transfer
Each of these is fully preventable. None of them are cheap to fix once a plant is under construction.
Author : Sanjay Sharma, In case of any queries please contact/write back to us via email to [email protected] or at IIPRD
How We Help
At IIPRD, working in close association with Khurana & Khurana (K&K), we support semiconductor companies with patent landscaping, FTO and infringement analyses, patent portfolio development, licensing and commercialization strategy, and technology transfer structuring, sequenced against your manufacturing and incentive timeline rather than delivered as a standalone legal opinion disconnected from your launch plan.
If you’re structuring a fab, fab-lite, OSAT, or ATMP entry into India, the FTO conversation belongs on your calendar now, not at commercial launch.
Reach out to our team for a confidential discussion on your India entry and IP strategy.