India’s semiconductor market is poised to reach $103.4 billion over the next five years, driven by growth in automotive and industrial electronics, according to the Indian Electronics and Semiconductor Association (IESA). This expansion will support a $400 billion electronics market by 2030. With the market currently valued at $52 billion for 2024-25, India is expected to maintain a robust compound annual growth rate (CAGR) of 13 percent through the decade, as per a report by the Financial Express.
The report highlights that while emerging sectors offer new opportunities for value addition, established segments like mobile handsets, IT, and industrial applications continue to dominate, contributing nearly 70 percent of semiconductor industry revenue.
Key drivers of growth
Advancements in mobile technology, IT, and industrial automation are fueling India’s growing reliance on semiconductors for various industries. With its expansion of 5G infrastructure and consumer electronics, including smartphones and smart devices, the telecommunications sector remains central to this growth.
However, new opportunities are also emerging. The automotive sector, particularly with the rise of electric vehicles (EVs), is increasingly dependent on semiconductors for crucial components like sensors and battery management systems. Similarly, industrial electronics, including automation, robotics, and smart grids, is becoming a significant expansion area.
IESA Chairman V Veerappan emphasized that these sectors present substantial potential for India to add value through increased domestic production and technological innovation.
Government policies boosting semiconductor development
India’s semiconductor ambitions’ success heavily relies on government policies designed to foster local manufacturing and R&D. Ashok Chandak, President of IESA, highlighted that initiatives like targeted incentives for Fabs (fabrication plants) and OSATs (Outsourced Semiconductor Assembly and Test), along with increased investments in research and development, are critical in advancing India’s semiconductor capabilities.
Over the past year, companies aiming to establish semiconductor production facilities in India have committed more than $21 billion in investments. The India Semiconductor Mission, launched as part of the broader ‘Make in India’ campaign, has approved five significant projects. These include ventures by Micron Technology, Tata Electronics, CG Power, and Keynes, setting the stage for India’s first considerable semiconductor manufacturing base.
The Make in India initiative has also enabled the domestic production of critical electronic components, such as chargers, USB cables, battery packs, camera modules, and display assemblies. These developments are expected to significantly reduce India’s reliance on imports and enhance the country’s competitiveness in global electronics manufacturing.
Recommendations for future growth
The IESA report makes several recommendations to help India achieve its semiconductor goals. Key suggestions include continuing the India Semiconductor Mission beyond its initial $10 billion outlay and modifying the Design-Linked Incentive (DLI) scheme to support emerging needs better.
The report also suggests setting a target of 25 percent local value addition by 2025-26 and increasing this to 40 percent by 2030 under the Production Linked Incentive (PLI) scheme. These measures aim to boost India’s domestic electronics manufacturing ecosystem and solidify its global semiconductor supply chain position.
With these strategies in place, India is on course to become a significant player in the semiconductor industry, capitalizing on both traditional growth sectors and emerging opportunities in high-tech industries.
