India's Semiconductor Vision for 2035

India's Semiconductor Vision for 2035

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Why in News

  • NITI Aayog's Frontier Tech Hub (FTH) recently published an important report titled Future of India's Semiconductor Industry to guide the country toward global leadership in chip manufacturing.
  • This report outlines India's Semiconductor Vision 2035 as a complete roadmap for building a fully self-reliant chip economy.
  • The announcement arrives right alongside the Union Budget 2026 introduction of ISM 2.0 (India Semiconductor Mission 2.0) to deepen the domestic manufacturing ecosystem.

Summary

  • India’s Semiconductor Vision 2035 aims to create a USD 120-150 billion semiconductor value chain while making the nation a powerhouse in chip design and packaging.
  • To reach these goals, the government relies on the 5P Strategy covering pioneering work, policies, production, workforce training, and international partnerships.

What is India’s Semiconductor Vision for 2035

  • India wants to establish a USD 120-150 billion semiconductor value chain by the year 2035 through strategic self-reliance and global partnerships.
  • The first pillar focuses on achieving strategic self-sufficiency by dominating mature nodes while selectively investing in advanced chip technology.
  • The second pillar builds ecosystem strength by turning India into a global leader for chip design and Outsourced Semiconductor Assembly and Test (OSAT) services.
  • The third pillar ensures global indispensability by becoming a reliable provider of Gallium Nitride (GaN) and Silicon Carbide (SiC) chips.
  • By 2035, the country aims to capture 10-13% of the global semiconductor chip market.
  • India targets becoming a top-3 global destination for advanced packaging and OSAT operations.
  • The plan seeks to fulfill 35-50% of domestic demand through local production, an increase from earlier targets.
  • Local value retention inside every consumed chip should reach 55-70% through domestic design and materials.
  • The country plans to generate 100+ advanced IPs in artificial intelligence, quantum computing, and high-performance processing.
  • Engineers plan to export affordable chips for 5G and 6G phones to 50+ nations worldwide.
  • India aims to secure the position of top global supplier for wide-bandgap materials like silicon carbide and gallium nitride.

What is India's 5P Semiconductor Strategy

  • The pioneering pillar focuses on building domestic research and design capabilities for compound chips and advanced 3D integration methods.
  • In the short term, authorities will provide access to design tools and launch a National Co-Design Platform using artificial intelligence automation.
  • Medium-term steps involve setting up Centres of Convergence at premier institutes under the National Frontier Semiconductor Research Programme.
  • Long-term plans include running a Strategic IP & Patent Programme supported by a dedicated sovereign fund.
  • The policy and investment pillar estimates a capital need of USD 135-180 billion over ten years to build the sector.
  • The central government will anchor roughly one-third (~USD 45-60 billion) of this funding to reduce risks for private investors.
  • Short-term policy actions include setting up an autonomous nodal agency and establishing single-window clearances for businesses.
  • Medium-term measures introduce full stack incentives and enforce rules for domestic chip use in defense and telecom.
  • Long-term policy work will operationalize a National Capital Framework tied to the National Investment and Infrastructure Fund.
  • The production pillar prioritizes wafer fabrication, advanced packaging, and secure manufacturing facilities.
  • Short-term production steps involve building National Semiconductor Zones (NSZs) powered by clean energy sources.
  • Medium-term efforts include deepening advanced packaging through a National Centre for Advanced Packaging (NCAP).
  • Long-term manufacturing will deploy secure fabs with air-gapped networks for sensitive defense and aerospace needs.
  • The people pillar addresses the urgent need for skilled talent through long-term educational programs.
  • Layer one of the talent pyramid builds technician skills via a National Fab Academy and polytechnic networks.
  • Layer two updates university engineering courses to include hands-on chip tape-out experience.
  • Layer three supports materials researchers by upgrading nanoelectronics laboratories at top technical institutes.
  • Layer four runs a Global Talent Infusion Programme to bring experienced Indian diaspora professionals back home.
  • The partnership pillar secures vital geopolitical alliances with trusted democratic tech blocs like the USA, Japan, and EU.
  • These partnerships protect India's access to critical DUV (Deep Ultraviolet) and EUV (Extreme Ultraviolet) lithography tools during supply crunches.
  • Medium-term partnerships involve global university linkages and industrial joint ventures for mature-node factories.
  • Long-term diplomatic efforts will embed Indian researchers within global groups like IMEC and secure raw material treaties in Africa.

Where Does India Stand in the Global Semiconductor Landscape

  • The global semiconductor market reached USD 631 billion in 2024 and is expected to climb to USD 1.5 trillion by 2035.
  • Market growth moves at a steady compound annual growth rate of 8.5% per year.
  • Major demand drivers include artificial intelligence computing, 5G networks, and data centers.
  • Other key demand sectors feature Electric Vehicles (EVs) and Advanced Driver Assistance Systems (ADAS) systems alongside industrial automation.
  • Global supply chain shocks have forced governments everywhere to build resilient domestic semiconductor industries.
  • India currently imports 90-95% of its semiconductor demand, creating massive supply chain risks.
  • The nation spent nearly USD 150 billion on chip imports between fiscal year 2017 and fiscal year 2025.
  • Import costs grow at an annual rate of 23%, threatening to hit USD 240 billion by 2035 if left unchecked.
  • Domestic chip demand expands at a growth rate of 19%, aiming for USD 90 billion by FY2030 and USD 200+ billion by FY2035.
  • India holds a major structural advantage by housing ~20% of the global semiconductor design workforce.
  • The country's first fabrication plant located in Dholera, Gujarat is scheduled to start production by 2028.
  • The India Semiconductor Mission (ISM) acts as the central agency under MeitY for funding local chip manufacturing facilities.
  • Announced in the budget, ISM 2.0 expands focus toward advanced packaging, OSAT services, and compound semiconductors.
  • Additional government support comes through the Production Linked Incentive (PLI) scheme for electronics and IT hardware.
  • Other supportive policies include the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and electronics manufacturing clusters.
  • Public procurement rules prioritize locally made goods, while the Design Linked Incentive Scheme aids fabless startups.
  • The Digital India RISC-V Programme and Chips to Startup Programme promote open-source processor development and tool access.
  • Heavy import reliance creates national security threats because core defense hardware like UAVs depends entirely on foreign parts.
  • Building local factories removes financial liabilities and makes digital devices cheaper for millions of citizens.

Challenges

  • Chip design involves extreme technical complexity and heavy reliance on expensive design automation tools.
  • The industry faces a severe shortage of skilled engineers trained in lithography, testing, and advanced R&D.
  • Semiconductor fabrication requires massive amounts of water and energy, demanding sustainable resource management.
  • New fabrication plants take 4-5 years just to become operational, delaying financial returns.
  • Building a basic factory demands massive capital, with standard plants costing over USD 5 billion and advanced ones exceeding USD 15 billion.

Opportunities

  • India can utilize its software strength to design energy-efficient chips for communication networks and smart devices.
  • Advanced packaging requires lower capital than wafer fabrication, allowing India to become a global hub for chip assembly and packaging.
  • Wide-bandgap chips offer strong market opportunities for electric vehicles, renewable energy systems, and 5G networks.
  • Engineers can develop specialized radio frequency chips for wireless communication, radar, and satellite systems.
  • Early involvement in quantum and neuromorphic computing gives India a chance to gain a first-mover advantage.
  • Local companies can manufacture affordable mass-market chips for smartphones, sensors, and consumer electronics.

Conclusion

  • India possesses the ideal talent pool and market size to transform into a major global pillar for semiconductor manufacturing.
  • Policymakers emphasize that failing to act now carries heavy strategic and economic penalties for the nation.