V. Veerappan
INDIA’S ELECTRONICS APPETITE, driven by mobiles, is growing at an unprecedented pace. A decade ago, smartphones were a luxury―the penetration rate was just 19 per cent. Today, over 70 per cent of Indians own smartphones. This digital transformation is not just about mobile phones―it extends across multiple sectors, each contributing to the soaring demand for semiconductors.
The e-commerce boom is one such driver. The rapid expansion of India’s telecom and cloud ecosystem has also reshaped how businesses and individuals connect. The post-pandemic shift to remote work has further accelerated this trend, making Wi-Fi routers common in Indian households.
Beyond connectivity, emerging industries are amplifying the semiconductor surge. Electronic vehicles require advanced chips for battery management and smart driving systems. Artificial intelligence and automation are transforming industries, with factories deploying AI-powered robotics to enhance efficiency and precision. These factors converge to create such an insatiable demand for chips that the Indian semiconductor market could cross $100 billion in revenues by 2030.
The future of Indian-made chips in the country’s semiconductor landscape remains an open question. India has yet to establish a foothold in the manufacturing, assembly and packaging of integrated circuits. Unlike other global players, we are not yet exporting chips, nor do we have the facilities for producing semiconductors at scale.
Change is on the horizon, though. India Semiconductor Mission has given subsidies worth $10 billion for developing semiconductor and display manufacturing facilities in the country. This production-linked incentive scheme has lowered capital costs for companies setting up chip-making plants, ensuring they can compete on a global scale. The ‘Digital India’ and ‘Make in India’ initiatives are also playing important roles. As a result, in the next three to five years, we will have India-manufactured ICs.
But our imports will not diminish overnight. It could come down by 10-20 per cent in the coming years, and we will have to still largely depend on other countries.
One notable shift that may take place is the declining dependence on Chinese semiconductors. At present, China is India’s largest source of chip imports, but this is expected to change due to the ‘China plus one’ policy. Countries like Germany, Israel, Taiwan, the US, Japan, Vietnam and Malaysia will fill the gap in the near future, reducing India’s exposure to Chinese suppliers.
But, the semiconductor market is deeply intertwined with both superpowers―the US dominates intellectual property rights, while China leads in high-volume manufacturing. Unlike many nations that have chosen sides, India has pragmatically kept its doors open to both.
While a complete halt in chip imports from China is unlikely, India’s engagement with the US in semiconductor technology is growing. One of the biggest factors shaping India’s role is its deep-rooted connection to American semiconductor firms. Many of them have their largest design teams based in India. The US also views India as an essential ally in its semiconductor ambitions, and a recent bilateral agreement to establish a semiconductor fab has strengthened ties.
India must also strengthen its position as an exporter. Today, global companies leverage India for chip design. If Indian manufacturers can produce and export chips in addition to offering design expertise, the country’s status in the global semiconductor value chain will rise significantly.
Veerappan is chairman, India Electronics and Semiconductor Association.