India’s Semiconductor Industry Gains Momentum With $18 Billion In Investments

India is emerging as a key player in the semiconductor industry, driven by strong government policies, low-cost production, and strategic ties with Western nations. A recent Jefferies report highlights that over $18 billion in semiconductor investments are already underway, positioning India to replicate its success in the automotive sector.

Strong Policy Support And Rising Demand

The Indian government’s $10 billion incentive program, launched in 2021, is covering up to 50% of project costs for chip and display fabs and testing facilities. Additionally, several states are offering incentives of up to 20%, pushing total fiscal support to 70%. This strategic push is expected to cut import dependency and increase domestic production.

Notably, India’s electronics imports reached $60 billion in FY24, contributing 25% to the trade deficit, second only to oil. Rising demand for electronic products, increasing incomes, and rapid digital adoption are driving the sector’s growth. The government aims to quadruple electronics production to $500 billion by 2030.

Major Investments Underway

India has already secured five key semiconductor projects. Tata Electronics’ $11 billion chip fab with Taiwan’s PSMC will begin operations in 2026. These projects will create around 80,000 direct and indirect jobs, strengthening India’s semiconductor ecosystem.

Meanwhile, the government is focusing on building the entire semiconductor supply chain, from chemicals and gases to components and equipment. Minister of Railways and Electronics and IT, Ashwini Vaishnaw, stressed the government’s commitment to building a complete semiconductor ecosystem and attracting global players.

Jefferies highlighted India’s strategy to adopt proven technologies rather than competing with advanced nodes. This approach mirrors India’s success in the automotive industry, which grew from a struggling sector in the 1980s to the fourth-largest vehicle producer globally.

However, challenges remain. India faces a weak supply chain, limited manufacturing expertise, and tough global competition. Even so, with strategic government support and growing demand, India’s semiconductor industry is poised for long-term growth.

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