India’s emergence as a semiconductor hub is gaining traction, driven by favorable government policies, growing demand, and cost-effective production capabilities, according to a recent report by Jefferies. The report emphasizes that India’s strategic alliances with Western nations play a crucial role in this transformation.
Bolstered by strong policy support and a rapidly expanding market, India has the potential to replicate its automotive manufacturing success in the semiconductor sector. The country has already attracted $18 billion in investments, a key driver in advancing its semiconductor ambitions.
Among the notable projects is Tata Electronics’ $11 billion semiconductor facility, developed in collaboration with Taiwan’s Powerchip Semiconductor Manufacturing (PSMC). The facility is expected to commence operations by 2026. Government officials have set an ambitious goal of quadrupling electronics production to $500 billion by 2030, marking a significant step toward sectoral self-reliance.
The report highlights India’s surging electronics sector, fueled by rising incomes and increasing digital adoption. Electronics imports reached $60 billion in FY 2024, prompting the government to ramp up domestic manufacturing efforts to reduce the trade deficit.
A cornerstone of India’s semiconductor push is the $10 billion incentive program launched in 2021, offering up to 50% funding for chip and display projects, with additional state incentives bringing total support to nearly 70% for new ventures. These initiatives are expected to generate approximately 80,000 jobs, strengthening India’s position in the global semiconductor supply chain.
Railways and IT Minister Ashwini Vaishnaw has underscored India’s commitment to building a comprehensive semiconductor ecosystem, leveraging the country’s existing design expertise and growing appeal to international investors. While challenges such as supply chain gaps and global competition remain, India’s focus on proven technology could mirror its transformation in the automotive sector.
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