The Race Toward India’s $100 Billion Chip Ecosystem

Every digital system runs on semiconductors.

Phones, electric vehicles, AI servers, medical devices, defence systems, and data centres all depend on chips to function.

As India’s economy becomes increasingly digital, semiconductor demand is rising alongside it.

But there is one important reality.

India still imports more than 90% of its semiconductor requirements, and that dependence has created both a vulnerability and an opportunity.

And by 2030, that opportunity could become a $100 billion market.

To understand the scale of this shift, it is important to first understand what semiconductors actually do.

Semiconductors are tiny chips that store, process, and transmit data. They allow devices to compute, communicate, and operate efficiently.

In 2023, India’s semiconductor market was valued at nearly $38 billion and by 2030, the market could expand to nearly $100-110 billion.

This growth is being driven by multiple industries at the same time.

Electronics manufacturing is one of the largest contributors.

India’s electronics production is expected to reach $500 billion by FY30, creating significant demand for semiconductor components. Smartphones alone currently account for nearly 30% of the country’s chip demand.

The automotive sector is also becoming increasingly chip-intensive.

Modern vehicles rely heavily on chips for infotainment systems, navigation, battery management, sensors, safety features, and connectivity. As electric vehicle adoption rises, semiconductor usage per vehicle is expected to increase sharply.

The semiconductor value per vehicle could rise from around $600 in 2025 to around $1,200 by 2030.

At the same time, EV penetration in India is projected to increase from 7.8% in 2025 to nearly 30% by 2030, and potentially over 60% by 2035.

Another major demand driver is the rapid expansion of data centres and artificial intelligence infrastructure.

Between 2019 and 2024, India’s data centre sector attracted nearly $60 billion in investments, with another $45 billion expected by 2027.

As cloud computing and artificial intelligence continue expanding, demand for high-performance chips is likely to rise alongside them.

But despite this growing demand, India still relies heavily on imports.

More than 90% of the country’s semiconductor requirements are sourced from overseas markets.

China accounts for nearly 29.8% of India’s semiconductor imports, followed by Hong Kong at 17.8%, South Korea at 11.1%, and Taiwan at 10.7%.

This concentration creates supply-chain risks, especially during periods of geopolitical uncertainty and global shortages.

As a result, the focus has increasingly shifted towards domestic manufacturing capabilities.

That shift is now being led through the India Semiconductor Mission.

Launched in 2021 with an outlay of ₹76,000 crore, the mission aims to build a comprehensive semiconductor and display manufacturing ecosystem in India.

The broader objective is not just import reduction.

It is also about positioning India as a global hub for electronics manufacturing and chip design.

Over the last few years, the ecosystem has started evolving steadily.

Between 2023 and 2025, ten semiconductor-related projects were approved across six states, attracting cumulative investments exceeding ₹1.6 lakh crore.

In 2025, India also announced its first 3nm chip design centres in Noida and Bengaluru, signalling progress towards advanced semiconductor capabilities.

The policy framework has continued to expand as well.

In 2026, ISM 2.0 was announced with an allocation of ₹1,000 crore. The focus is now shifting towards semiconductor equipment, materials, stronger supply chains, and full-stack chip capabilities.

To accelerate manufacturing, the government has introduced multiple incentive schemes across the value chain.

Under the Semiconductor Fabs Scheme, fabrication units can receive fiscal support of up to 50% of project costs.

The Display Fabs Scheme offers similar support for AMOLED and LCD manufacturing facilities.

The ATMP and OSAT schemes support assembly, testing, marking, and packaging operations with capital assistance of up to 50%.

At the same time, the Design Linked Incentive scheme is encouraging startups and MSMEs working on chip design.

The scheme has an outlay of ₹1,000 crore and provides support of up to ₹15 crore per company.

Alongside policy support, large-scale investments have also started taking shape.

Tata Electronics Private Limited has announced investments of nearly ₹91,000 crore in semiconductor manufacturing, while Tata Semiconductor Assembly & Test Private Limited is investing around ₹27,000 crore.

Other major participants include CG Power & Industrial Solutions Limited, the HCL-Foxconn joint venture, and Kaynes Technology India Limited.

Together, these investments indicate that India’s semiconductor ambitions are moving beyond policy announcements into execution.

Looking ahead, the country has outlined ambitious long-term targets.

By 2029, India aims to achieve 70-75% domestic semiconductor design and manufacturing capability.

By 2035, the country plans to build 4-5 silicon fabrication units, 8-10 compound semiconductor fabs, and 20-25 packaging and testing facilities.

The broader goal is to eventually meet nearly 60% of domestic semiconductor demand locally.

Achieving this, however, will depend on how effectively India executes the transition from demand-driven consumption to large-scale domestic capability.

Sources:

• PIB
  
• Technology, Media and Telecommunications Predictions, Deloitte
  
• Ministry of Commerce and Industry