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India should stop measuring its semiconductor ambitions solely through advanced chip fabrication plants. According to a new NITI Aayog roadmap, the country should rather focus on segments where it has a stronger chance of competing globally.
The report argues that India risks spending heavily on a race dominated by countries that have built semiconductor ecosystems over several decades. Instead, it recommends prioritizing semiconductor design, chip packaging, testing, assembly, and compound semiconductors.
The recommendation comes as India accelerates efforts to build a domestic chip industry through government incentives and investments.
The dependence on foreign semiconductors in India still persists despite all the support provided by the government for such ventures. According to the report, 90%-95% of the semiconductor requirement in India comes from abroad. The import value of semiconductors in India between FY 2017 and FY 2025 was $150 billion.
The import value may go up to $240 billion by 2035 in the absence of any significant domestic capacity. Semiconductors have become essential in industries from consumer electronics to telecommunications, electric vehicles, defense, and artificial intelligence.
NITI Aayog points out that the manufacture of semiconductors is one of the most capital-intensive activities in the world. The construction of an advanced fabrication facility costs well over $5 billion, while a leading-edge fabrication facility costs over $15 billion.
Companies need specialized supply chains, experienced workforces, stable utilities, and manufacturing experience. The study suggests that it may not be the most realistic approach to emulate the manufacturing successes of countries like Taiwan, South Korea, or China.
The road map makes use of the existing semiconductor design ecosystem of India as one of its main strengths. Major international manufacturers have their centers of design and R&D based in cities like Bengaluru, Hyderabad, and Noida, employing many engineers.
According to NITI Aayog, India has a strong starting point to become a leader in the semiconductor supply chain and high-value niches. The roadmap also notes the growing popularity of compound semiconductors like silicon carbide and gallium nitride.
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The demand for semiconductors in India is expected to grow rapidly in the coming decade, led by artificial intelligence, data centers, fifth-generation and sixth-generation networks, electric cars, and other smart devices.
The forecast suggests that the demand for semiconductors in India will be worth more than $200 billion by 2035. The NITI Aayog's advice to India is clear: India should not be the next Taiwan. Instead, it should focus on areas that will enable it to gain from its own strengths.
