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The semiconductor market in India is set to grow at a high rate, with its worth likely to increase from USD 34.3 billion in 2023 to USD 100.2 billion by 2032, as per a Union Bank of India Research report. This expansion is a compound annual growth rate (CAGR) of 20 per cent, a far cry faster than the global semiconductor industry CAGR of almost 10 per cent over the same time frame.
India is already playing a key role in the global semiconductor ecosystem, with the Asia-Pacific region contributing an estimated 60 percent of global semiconductor production. India exported semiconductor devices to the tune of USD 516 million in 2022, primarily to the United States, Hong Kong, and South Africa, but imports were even higher at USD 4.55 billion, especially from countries like China, Singapore, and Vietnam.
Telecom and industrial uses are likely to drive most of the semiconductor demand in India. The major types of consumption will be mobile, IT hardware, consumer electronics, and industrial. It is believed that the implementation of 5G networks, artificial intelligence, and the expansion of electric vehicles will be significant growth drivers.
The government has initiated the India Semiconductor Mission and an incentive outlay of USD 10 billion to increase the domestic manufacturing of semiconductors. This entails up to 50 percent funding of project costs on semiconductor and display fabs, as well as funding of assembly, testing and packaging plants. An incentive scheme which is design-linked has also been launched to support the homegrown semiconductor design companies.
States such as Gujarat, Tamil Nadu, Odisha, and Uttar Pradesh have even launched specific semiconductor policies, with Karnataka, Telangana, and Maharashtra also trying hard to attract investments. To complement that, a national-level talent development programme is expected to train 85,000 engineers in the areas of semiconductor design and fabrication.
India is already a major contributor to global chip design, with close to 20 percent of the global semiconductor design workforce located in India. Both international semiconductor companies and local design services provide more than one lakh VLSI engineers. This deep talent pool goes to support the potential of India to grow its presence throughout the semiconductor value chain.
