India Sets Sights on Trillion-Dollar Semiconductor Market by 2030

semiconductor market

SUMMARY

India’s semiconductor market, currently worth $23.2 billion, is primed to hit $80.3 billion by 2028, fueled by the rising demand for electronics and tech innovations like AI. With government incentives under the 2020 Semiconductor Policy, India hopes to reduce its dependence on imports and build a self-sustaining chip industry. But as India aims to become a global semiconductor hub, it faces infrastructure and investment challenges that could stand in its way. Will India overcome these hurdles to claim a key spot in the global tech market?

India’s Semiconductor Market: Growth at a Breakneck Pace

India is racing ahead in the semiconductor game, with the market projected to grow at an impressive 17.1% CAGR, potentially reaching $80.3 billion by 2028. The increasing demand for smart devices, AI-driven tools, and other cutting-edge technologies has put semiconductors in the spotlight. Recognizing this potential, the government launched the 2020 Semiconductor Policy, aiming to reduce dependency on imports while fostering a thriving domestic ecosystem for design and manufacturing.

India’s Trillion-Dollar Vision aligns perfectly with the global semiconductor industry’s projected valuation of $1 trillion by 2030. With global companies looking to diversify their supply chains away from Taiwan, India has a unique chance to step up. Prime Minister Modi recently presented this ambitious semiconductor roadmap at SEMICON India 2024, highlighting how India’s skilled workforce, democratic values, and reliable supply chain make it an attractive destination for chip giants.

Investment Incentives and High-Stakes Goals

Building a semiconductor industry is no small feat, with setup costs estimated to be between $5-7 billion for a single chip fabrication plant. This high cost is one of the reasons why the government is offering generous financial incentives through the Production Linked Incentive (PLI) Scheme. The goal? To establish a self-sufficient semiconductor industry that serves both local and global markets.

semiconductor market

But incentives alone may not be enough. India’s semiconductor ambitions demand a delicate balance between attracting foreign investment and creating a robust local industry. The PLI Scheme is designed to tip that balance in India’s favour by encouraging both innovation and high-volume manufacturing.

Roadblocks on India’s Path to Semiconductor Self-Reliance

India’s dream of semiconductor independence doesn’t come without its share of challenges. Semiconductor manufacturing is resource-intensive, requiring vast amounts of ultra-pure water and uninterrupted power—both of which can be hard to guarantee in India’s current infrastructure landscape. Power outages and water shortages could disrupt production, especially given that only a few regions in India can meet the stringent demands of chip manufacturing.

Geopolitics: An Unlikely Ally in India’s Semiconductor Ambitions

The geopolitical climate is creating an opening for India to gain a bigger slice of the semiconductor pie. With global reliance on Taiwanese semiconductor production at an all-time high, nations are looking for alternative manufacturing bases. India’s efforts to develop a robust semiconductor industry could not only address local demand but also position it as a critical part of the global supply chain.

The Talent Question: Building India’s Semiconductor Workforce

To support this ambitious push, India is investing heavily in workforce development. The government’s plans include training programs to develop a talent pool of 85,000 engineers and technicians. However, semiconductor manufacturing demands specialised skills, and sourcing talent with the right expertise remains a critical challenge. Building an ecosystem that nurtures talent and attracts international experts will be essential for India’s semiconductor aspirations.

Towards an Innovation-Driven Ecosystem

While India is already making strides with its manufacturing focus, innovation and R&D are key to taking it further. The semiconductor sector thrives on cutting-edge research, and India’s abundance of skilled talent presents a unique opportunity to cultivate a thriving innovation ecosystem. Encouraging collaboration among academia, industry, and research institutions can help India achieve not just semiconductor self-reliance, but global leadership. India’s semiconductor dream isn’t just about manufacturing—it’s about establishing a legacy of technological independence and prowess. With initiatives like the PLI Scheme, 2020 Semiconductor Policy, and a strong focus on local talent, India is laying the groundwork to become a chip giant. But can India overcome the hurdles ahead and claim its place on the global semiconductor stage?

FAQs

Why is India’s semiconductor market growing so rapidly?

The demand for smart devices, AI, and electronics has skyrocketed, leading to a booming semiconductor industry that is projected to reach $80.3 billion by 2028. Government policies also support local production to reduce dependency on imports.

What makes semiconductor fabs so costly?

Building a semiconductor fab requires vast amounts of ultra-pure water, reliable electricity, and high-tech equipment. The estimated cost of setting up a fab in India ranges from $5-7 billion, requiring strong government support to attract manufacturers.

What are the main challenges to India’s semiconductor vision?

Infrastructure issues, high initial investment costs, access to patented technology, and complex approval processes are key challenges. The government is working to address these through policies like the PLI Scheme and incentives for foreign and local companies.