India should seek to build a $120-150 billion semiconductor value chain by 2035, with the centre funding at least one-third of the required investments to de-risk projects and attract long-term capital, according to a report released by NITI Aayog’s Frontier Tech Hub.
The report titiled ‘Future of India’s Semiconductor Industry’, lays focus on transitioning the country beyond being a participant in the global semiconductor race to building leadership in areas where it can become strategically indispensable. It recommends focusing on advanced packaging, outsourced semiconductor assembly and testing (OSAT), semiconductor design, system architecture, and wide-bandgap materials such as Silicon Carbide (SiC) and Gallium Nitride (GaN), rather than attempting to directly compete with global leaders in advanced wafer fabrication.
Niche Domination over Fabrication
Investment figures of $135-180 billion over the next decade has been laid out to achieve the targets. This spreads across fabrication plants, advanced packaging facilities, design capabilities, and ecosystem infrastructure. Building a modern fabrication facility can cost upwards of $5 billion, while advanced-node fabs may require investments exceeding $15 billion, the report noted.
Importantly, five strategic pillars have been identified- namely Pioneering, Policy and Investment, Production, People, and Partnership to strengthen domestic capabilities. Key recommendations include setting up sovereign access to electronic design automation (EDA) tools, creating a national semiconductor capital framework, developing a skilled talent pipeline, and expanding trusted technology partnerships with countries such as the US, Japan, and Europe.
While the country accounts for around 20% of the global semiconductor design workforce, the idea is to develop more than 100 advanced semiconductor intellectual properties (IPs) until 2035. Additionally, achieving 35-50% chip self-sufficiency by 2030, and retaining up to 70% the value generated from chips consumed domestically has been earmarked until 2035.
$240 Billion Import Threat
What remains a critical eye opener is that 90-95% of the country’s semiconductor demand is currently met through imports, leaving critical sectors such as electronics, automobiles, telecom, healthcare and defence exposed to global supply-chain disruptions.
“This widening gap between demand growth and limited domestic capability represents a critical strategic vulnerability and yet also a historic opportunity,” the report said.
The concentration of semiconductor production in a handful of countries also increases the risk of geopolitical and logistical shocks, as witnessed during the Covid-19 pandemic.
Meanwhile, the economic burden of this dependence is also mounting. India cumulatively spent nearly $150 billion on semiconductor imports between FY17 and FY25, according to the report. Imports of semiconductor products grew at a compound annual growth rate of 23% during the period and, if the trend persists, the annual semiconductor import bill could surge to $240 billion by 2035.
The report estimates that India’s semiconductor demand could exceed $200 billion by 2035, driven by electronics manufacturing, artificial intelligence, electric vehicles, telecom infrastructure, cloud computing and defence modernisation. Globally, the semiconductor market is projected to cross $1.5 trillion by 2035.
The possibility for India to be recognised as one of the world’s top three destinations for advanced packaging and OSAT has been laid out, while building expertise in mature-node and compound semiconductor manufacturing.
NITI Aayog Vice Chairman Ashok Kumar Lahiri in his message said that growing dependence on imported black-box technologies is one of the biggest strategic risks to Viksit Bharat.
“Semiconductors sit at the heart of this foundation, powering everything from AI, defence and manufacturing to mobility, energy systems, communications and citizen services,” Lahiri added.