The country’s semiconductor market is expected to reach $64 billion by 2026, with significant demand from sectors like consumer electronics, telecom and IT hardware, according to a joint report by Counterpoint Research and the India Electronics & Semiconductor Association (IESA).
India’s telecom stack as well as industrial applications are expected to account for two-third of the semiconductor market size, the report said. In 2019, the country’s semiconductor market was valued at $22.7 billion.
“In the short-term, there is a huge opportunity being driven by domestic demand across applications like sensors, logic chips and analog devices,” said Tarun Pathak, research director at Counterpoint.
“Local sourcing is already happening in a significant way. It accounted for around 10% of the overall market in 2022,” Pathak added.
In the short-term, components leveraging mature technology chips, which are 28 nanometer and higher, are expected to see significant opportunities as they support India’s growing automotive and industrial sectors, the report said.
The government had in December 2021 announced a Rs 76,000-crore incentive scheme for the development of semiconductors and display manufacturing ecosystem.
In September last year, the incentive was further sweetened by making the fiscal support at 50% of project cost, uniform across all technology nodes, for setting up of a semiconductor fabrication facility. Earlier, the fiscal support varied between 30-50% for different units.
“India is committed to becoming a reliable partner in global supply chains and we are working towards that by framing long-term policies, keeping next 25 years in mind,” said Amitesh Kumar Sinha, CEO of the India Semiconductor Mission (ISM) and joint secretary, Ministry of Electronics and Information Technology (MeitY).
“More than 70% of the project costs for semiconductor manufacturing are incentivised by the central and state governments in India, of which 50% is funded by the central government on an upfront basis while the rest is covered by the state governments,” Sinha added.
Companies such as Vedanta-Foxconn JV, IGSS Ventures and ISMC have proposed to set up chip manufacturing plants with $13.6 billion investment and have sought support of $5.6 billion from the government under the incentive scheme. Of the proposals received, the government is yet to approve two proposals.
Apart from the semiconductor fabrication units, the government has also launched a design-linked incentive (DLI) scheme, which involves designing and deployment of semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs), systems & IP Cores.
A scheme for setting up of display fabrication units and a plan for setting up compound semiconductors / silicon photonics / sensors fab and semiconductor assembly, testing, marking and packaging were also launched.
In total, the government received 23 applications for Rs 76,000 crore under the PLI scheme for semiconductors, minister of state for information and technology Rajeev Chandrasekhar told Parliament last year.
The government also approved the modernisation of a semiconductor laboratory in Mohali as a brownfield fabrication facility.
With India becoming a major player in the global semiconductor value chain, the industry will further expand to a market size of $85 billion by 2030, according to Deloitte.
As per Deloitte’s estimates, the country’s semiconductor market is expected to reach $55 billion by 2026 on the back of growing demand from smartphones, automotive components, computing and data storage sectors, which will contribute more than 60% to the industry.