India is setting an ambitious goal to develop a semiconductor value chain worth between $120 billion and $150 billion by 2035, as highlighted in a recent report by NITI Aayog. This initiative aims to enhance domestic capabilities, ensuring strategic self-sufficiency and positioning India as a key player in the global semiconductor market.
Investment Strategy: The report emphasizes that the Indian government should allocate at least one-third of the total required investment to mitigate risks associated with semiconductor projects. This commitment is essential for fostering long-term investor confidence.
To establish a competitive semiconductor ecosystem, the country will need cumulative investments of approximately $135 billion to $180 billion over the next decade. These funds will be directed towards various sectors, including design, fabrication, advanced packaging, materials, and the necessary supporting infrastructure.
Focus Areas: Key areas for public funding should include:
- Fabrication plants (fabs)
- Advanced packaging technologies
- Compound semiconductors
- Critical design infrastructure
The report also stresses the importance of providing stable and predictable incentives, along with coordinated execution across the semiconductor value chain.
Market Potential: India’s semiconductor market is projected to reach around $200 billion by 2035. However, the current landscape reveals that 90-95% of the domestic demand is met through imports, resulting in significant foreign exchange outflows and heightened vulnerability to supply chain disruptions.
Strategic Importance: NITI Aayog Vice Chairman Ashok Kumar Lahiri pointed out that reliance on imported technologies poses a strategic risk to India's aspirations for development. Achieving technological sovereignty, particularly in semiconductors, is crucial for the nation’s progress.
Semiconductors are integral to various sectors, including artificial intelligence, defense, telecommunications, and healthcare. Their pivotal role underscores the need for India to build robust domestic capabilities to enhance economic resilience and national security.
Future Outlook: The global semiconductor market is expected to grow at a CAGR of 8.5% over the next 5 to 10 years, driven by advanced technology. In parallel, India's semiconductor demand is projected to grow at a CAGR of 19%, potentially reaching $90 billion by FY2030 and exceeding $200 billion by FY2035.
