Semiconductor Industry: The Next Growth Story of India

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The semiconductor industry in India has been witnessing significant growth and exudes promising business and investment opportunities. India has a strong, technology-driven market and a large talent pool, making it an attractive destination for semiconductor companies. In line with the national visions of “Make in India”, which aims to promote domestic production and manufacturing in India and for the world, and “Atamnirbhar Bharat”, which is a vision to make India self-reliant and minimize dependences on imports, India intends to become a global hub for semiconductor manufacturing, and it may be on its way. India’s semiconductor market reached US$ 22.7 billion in 2019 and is expected to reach US$ 110 billion by 2030.  It will surge ahead by as much as five times due to huge domestic demand created by the country’s telecom stack and industrial applications.

The growing demand for semiconductors in the Indian market is driven by the large electronic consumer base, steady increase in smart phone users, proliferation of IoT devices across sectors, industrial automation, and the rapid adoption of technology and automotive electronics, especially in EVs. However, while India has all the capabilities of and access to raw materials, R&D and talent pools, local manufacturing has not harnessed its full potential, and thus India operates with limited manufacturing units in this sector. In order to meet the rising domestic demand for semiconductors, India has instead relied on imports from China, Japan, Singapore, Taiwan, South Korea and others. According to the ITC Trade Map statistics, India imported semiconductor products worth US$ 54.87B in 2021. Various programs and initiatives by India’s Central Government aim to address this demand-supply gap in the country’s semiconductor industry through attracting investors to manufacture domestically.

Source: ITC Trade Map

Recognizing the fragility of the global supply chain, as well as the importance of driving economic growth and fostering innovation in the country, India’s government has been gearing up to create a self-sustaining semiconductor ecosystem. The central flagship “Semicon India” program, with a financial outlay of US$ 10 billion, comprises the bedrock of this plan, intending to reduce India’s dependency on imports by attracting and incentivizing manufacturers setting up units for semiconductor and display fabs and developing R&D and design capabilities. Moreover, the government’s recent announcement to modernize the Semiconductor Laboratory in the State of Punjab through an investment of US$ 1.2 billion, along with its vision of 5G deployment across countries, semiconductor Production-Linked Incentive (PLI) scheme and 100% FDI in the sector, will boost growth and take India one step closer to being a major player in the industry.

Through government-to-government engagement, India recently signed an MoU with the United States to foster innovation and strengthen the chip supply chain, and it is also working closely with Japan and Australia to establish a robust supply chain. These bilateral arrangements will help the free flow of technology and chip design capabilities that could boost manufacturing in India.

Efforts to establish new semiconductor fabrication units and expand existing ones in the country have been met with promising interest from global chip makers. The recent investment commitments from large players such as Foxconn and Indian conglomerate Vedanta, which plan to set up greenfield semiconductor and display manufacturing plants in India, have already set the momentum.

Given the high utility of semiconductors and their components across sectors, as well as ever-increasing demand both in India and globally, there is ample opportunity for manufacturers to grow their involvement in the industry. Some of the opportunities for foreign players in this sector in India include:

  • Investing in semiconductor fabrication plants or partnering with existing fabs
  • Setting up design and R&D centres to tap into the skilled workforce and foster innovation
  • Partnering with Indian companies or investing in semiconductor manufacturing equipment, testing services, packaging, and assembly solutions
  • Investing in Indian fabless semiconductor
  • Investing in supply chain/logistics, warehousing, distribution, and supply chain management services in the semiconductor industry

How Tractus Can Help

While this industry provides great opportunities in India, it is imperative to understand the dynamics, regulatory norms and potential risks before making any investment decisions. The team at Tractus, with in-depth industry knowledge and market experts, can help significantly to navigate this process and optimize your investment.


Authored by

Written by Anuj Kumar, Senior Consultant based in the India office.


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