New Delhi, India – India’s semiconductor industry is entering a high-growth phase, driven by rising electronics consumption, chip-design capabilities, government incentives and investments in domestic manufacturing and packaging.
According to a report by Kotak Mahindra Mutual Fund, India’s semiconductor market could grow to $155 billion by calendar year 2031 (CY31) from an estimated $62 billion in CY26. This represents a projected 20% compound annual growth rate (CAGR).
If the forecast materialises, India’s share of global semiconductor consumption could increase from around 6% in CY26 to approximately 9% by CY31.
India’s semiconductor opportunity is expanding
The semiconductor market is becoming increasingly important to India as demand grows across smartphones, automobiles, electric vehicles, telecommunications, defence and artificial intelligence infrastructure.
The Kotak Mahindra Mutual Fund report identifies several factors that could support the country’s semiconductor expansion, including:
- Growing domestic electronics consumption
- A large chip-design talent pool
- Government incentives
- Semiconductor fabrication investments
- Expansion of OSAT and ATMP facilities
- Growth of GCCs and technology research
- Increasing demand from AI data centres and electric vehicles
Together, these factors could help India move beyond its traditional strength in semiconductor design and develop greater manufacturing and packaging capabilities.
India has a major advantage in chip design
India already has a significant presence in global semiconductor design.
The report estimates that the country has approximately 300,000 chip designers, representing around 20% of the global chip-design workforce.
India currently ranks second globally after the United States in chip-design talent.
The government and industry are now aiming to strengthen this position further, with ambitions to establish India as a global leader in semiconductor design by CY30.
Programs such as the Chip-to-Startup (C2S) programme and the Design Linked Incentive (DLI) scheme are expected to support this objective by encouraging domestic semiconductor design and innovation.
Manufacturing remains India’s biggest gap
While India has developed considerable semiconductor design expertise, large-scale commercial wafer fabrication remains at an early stage.
According to the report, India currently does not have a significant commercial wafer-fabrication presence and is targeting pilot-scale capabilities by CY30.
The country’s semiconductor packaging ecosystem is further ahead but is still developing. The OSAT (Outsourced Semiconductor Assembly and Test) and ATMP (Assembly, Testing, Marking and Packaging) segments are currently considered emerging and are expected to scale significantly by CY30.
This transition is important because a stronger domestic manufacturing and packaging ecosystem could reduce India’s dependence on overseas semiconductor supply chains.
Tata, Micron and other projects could reshape the ecosystem
Several major semiconductor projects are expected to contribute to India’s manufacturing ambitions.
The report highlights projects involving:
- Tata-PSMC’s 28nm semiconductor fabrication plant in Dholera
- Micron
- Tata Electronics
- Kaynes Semicon
- CG Semi
These investments could expand India’s capabilities across wafer fabrication, assembly, testing and packaging.
The development of these facilities could also encourage the creation of supporting industries supplying semiconductor materials, equipment and components.
India could have a cost advantage in semiconductor packaging
India’s relatively competitive labour and operating costs could provide an advantage in semiconductor assembly and testing.
The report estimates that OSAT costs in India could be 20% to 30% lower than those of comparable markets.
This potential advantage is supported by India’s large technical workforce, economies of scale and government incentives.
Government programmes can provide up to 50% capital expenditure support, further improving the economics of setting up semiconductor facilities in the country.
OSAT capacity could more than triple by 2028
India’s semiconductor packaging capacity is expected to increase substantially over the next few years.
According to the report, announced OSAT/ATMP capacity could rise from approximately 15 million chips per day in CY26 to 48 million chips per day by CY28.
Projects contributing to this expansion include facilities associated with:
- CG Semi
- Kaynes Semicon
- Tata OSAT
- HCL Group and Foxconn
The increase would represent a significant expansion in India’s ability to package and test semiconductor devices domestically.
AI, EVs and 5G could drive semiconductor demand
India’s semiconductor opportunity is closely connected to several rapidly expanding technology markets.
The report identifies 5G, electric vehicles, defence and AI data centres as key demand drivers.
The growth of AI infrastructure is particularly significant because data centres require large volumes of high-performance processors, memory and other semiconductor components.
Electric vehicles are another important source of demand as vehicles increasingly incorporate power electronics, sensors, connectivity systems and advanced computing.
The report estimates India’s semiconductor end-market could reach approximately $103 billion by CY30.
Import dependence remains a major challenge
Despite the growth opportunity, India still lacks several critical components of a complete semiconductor supply chain.
The country continues to rely heavily on imports for areas including:
- Semiconductor manufacturing equipment
- Specialty chemicals
- Electronic-grade gases
- Silicon wafers
- Substrates
- Lead frames
Building domestic capabilities in these areas will be essential if India wants to develop a more comprehensive semiconductor ecosystem.
Without a stronger local supplier network, semiconductor manufacturers could remain exposed to global supply-chain disruptions and imported input costs.
Government support could accelerate India’s semiconductor ambitions
Government incentives remain a central part of India’s semiconductor strategy.
The combination of manufacturing incentives, design-support programmes and capital subsidies is designed to attract investment while encouraging companies to establish semiconductor operations within the country.
The emergence of semiconductor-focused GCCs could also strengthen India’s research, engineering and product-development capabilities.
Over time, this could help create a broader ecosystem connecting chip design, fabrication, packaging, testing, equipment, materials and end-market applications.
India’s semiconductor market enters a critical decade
The projected rise from $62 billion in CY26 to $155 billion by CY31 would represent a major expansion of India’s semiconductor opportunity.
However, the next stage of development will depend on more than market demand.
India will need to successfully scale semiconductor fabrication and packaging, develop domestic suppliers, attract specialised talent and reduce dependence on imported manufacturing inputs.
If these pieces come together, India’s existing advantage in chip design could become the foundation for a much broader semiconductor value chain.
The opportunity is no longer simply to become a major consumer of semiconductors. It is to become a significant designer, manufacturer, packager and technology hub for the global semiconductor industry.
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Ruchi Kumar is the associate editor at Entrepreneur News Network and TVW News India, where she leads editorial strategy, brand storytelling, and startup ecosystem coverage. With a strong focus on innovation, business, and marketing insights, he curates impactful narratives that spotlight India’s evolving entrepreneurial landscape. She has written extensively on fintech, AI and emerging startups.