US Eases EDA Software Export Restrictions: Implications for India's Chip Industry

In a significant shift in global semiconductor dynamics, the United States has lifted restrictions on the export of Electronic Design Automation (EDA) software to Chinese firms, a move that industry experts warn could intensify competition for Indian companies in the chip design sector. This decision, announced on July 13, 2025, allows major EDA providers such as Cadence Design Systems, Siemens EDA, and Synopsys to resume full operations with their Chinese counterparts, marking a pivotal moment in the ongoing global chip race.

The easing of these restrictions, originally imposed during the Trump administration, has raised concerns among Indian industry leaders about the potential implications for their domestic semiconductor capabilities. "The strengthening capabilities of China’s industry could create increased competitive dynamics, not only for India’s EDA sector but also across the wider electronics and semiconductor industry," cautioned Ruchir Dixit, chairperson of the India Electronics & Semiconductor Association (IESA) board of directors, in an interview with Economic Times on July 14, 2025.

India has long been positioning itself as a key player in the global semiconductor supply chain, accounting for approximately 20% of the world's semiconductor design engineers. However, experts argue that the lifting of these restrictions could accelerate China's advancements in chip design, potentially undermining India's competitive edge.

Kunal Chaudhary, partner and co-leader of EY India’s Inbound Investment Group, emphasized the urgency for India to enhance its own chip design capabilities. "With the US easing EDA export restrictions for China, the global playing field is shifting. India must move faster on chip design. Developing our own chip design software is not just strategic but essential for resilience and leadership in the semiconductor innovation wave ahead," he stated.

The implications of this shift are profound. According to Biswajeet Mahapatra, principal analyst at Forrester, the renewed access to critical design software for Chinese firms could significantly bolster their research and development efforts, particularly in advanced technologies such as artificial intelligence and high-performance computing. India, while currently focused on mature process nodes that meet 75-80% of global demand, is striving to develop an end-to-end semiconductor value chain to meet future demands.

Experts predict that the competitive landscape will become even more challenging for Indian firms as they navigate the heightened competition from China. Shankar Krishnamoorthy, chief product development officer at Synopsys, noted that while he does not foresee similar restrictions being placed on India, the decision underscores the increasing competition India faces. "The semiconductor industry is rapidly evolving, and India must leverage its strengths in design and innovation to secure its future," he remarked.

In light of these developments, industry leaders are advocating for significant investments in research and development, skill enhancement, and strategic initiatives to bolster India's semiconductor ecosystem. This includes fostering a robust startup culture that can drive innovation in areas such as artificial intelligence, chiplets, and advanced integrated circuit packaging.

Jaswinder Ahuja, former managing director of Cadence India, pointed out that while the immediate impact on Indian firms might be limited, the long-term implications could be substantial. He highlighted opportunities for startups to explore new design approaches free from legacy constraints, which could lead to groundbreaking advancements in semiconductor technology.

As India stands at a crossroads in the semiconductor race, the call for a concerted effort to enhance domestic capabilities has never been more urgent. The global semiconductor landscape is shifting rapidly, and India's response will be crucial in determining its role in this critical industry moving forward.