New Delhi [India]: India is rapidly emerging as a semiconductor hub, driven by favorable government policies, growing demand, and strategic alliances with Western nations, according to a recent report by Jefferies.
The report highlights key factors contributing to this growth, including fiscal incentives, low manufacturing costs, a skilled design workforce, and rising demand for electronics.
“We believe India has strong potential to replicate its manufacturing success in autos to semis, led by policy support, rising demand, low cost, and strategic goodwill with the West,” stated the report.
Key Investments and Projects
The report emphasizes that India’s semiconductor ambitions are gaining momentum, with over $18 billion in investments underway across five major projects. Among these initiatives is Tata Electronics’ $11 billion chip fabrication plant, developed in partnership with Taiwan’s PSMC, set to begin operations in 2026.
In discussions with Jefferies, the Indian government revealed its aim to quadruple electronics production to $500 billion by 2030, highlighting the nation’s aggressive push to expand domestic manufacturing.
Electronics Growth and Import Challenges
India’s electronics sector is already witnessing strong growth, driven by rising incomes, digital adoption, and a surge in demand for electronic products. In FY 2024, electronics imports hit $60 billion, contributing 25% of the nation’s trade deficit — second only to oil.
To address this, the government introduced a $10 billion incentive program in 2021, covering approximately 50% of project costs for semiconductor and display manufacturing units. Some states are offering additional incentives of up to 20%, pushing total fiscal support to nearly 70%.
Positive Impact on Jobs and Ecosystem
These investments are expected to create approximately 80,000 direct and indirect jobs, significantly boosting India’s semiconductor ecosystem. The government is also focused on developing the entire semiconductor supply chain, from chemicals and gases to components and equipment.
Learning from the Automotive Industry
The report draws parallels between India’s semiconductor strategy and its success in the automotive industry. In the 1980s, India struggled to establish its auto sector, but with strong policies and a growing domestic market, it is now the fourth-largest vehicle producer globally. Experts believe a similar path could unfold for semiconductors.
Challenges Ahead
Despite this progress, the report warns of several hurdles, including an underdeveloped supply chain, limited manufacturing expertise, and intense global competition.
Minister of Railways and Electronics & IT, Ashwini Vaishnaw, stressed the government’s commitment to building a complete semiconductor ecosystem, leveraging India’s established design capabilities and attracting global tech players.
While India’s semiconductor journey is still in its early stages, its strategic approach is positioning the country as a promising player in the global semiconductor landscape.