India Aims to Become Semiconductor Powerhouse With $500 Billion Electronics Sector by 2030

India aspires to ascend as a prominent player in the semiconductor industry, aligning with its status as the world's fifth-largest economy and its pursuit of self-sufficiency in manufacturing. Prime Minister Narendra Modi has articulated ambitious objectives to propel the semiconductor sector forward, with a landmark target to elevate the electronics sector from its current valuation of $155 billion to an impressive $500 billion by 2030. This audacious undertaking has elicited a mix of intrigue and skepticism, as industry experts express divergent views on the feasibility of this goal. However, a consensus emerges on a crucial point: India requires collaborative efforts to achieve this monumental task.

India's Entry into Semiconductor Manufacturing

The semiconductor landscape is dominated by established players, with Taiwan commanding approximately 44% of the global market share, followed by China (28%), South Korea (12%), the U.S. (6%), and Japan (2%), as reported by Taiwanese consultancy Trendforce. Recognizing the need for collaboration, the Indian government has proactively engaged with key international partners to facilitate the growth of its semiconductor industry. Notably, Taiwan's Powerchip Semiconductor Manufacturing Corporation is set to assist Tata Electronics in establishing the country's inaugural 12-inch wafer fab in Gujarat, marking a significant step forward.

Moreover, American chipmaker Micron Technology has announced plans to roll out the first India-made semiconductor chip in 2025, underscoring the collaborative spirit driving India's semiconductor ambitions. The recent agreement between U.S. chipmaker Analog Devices and the Tata Group to explore building semiconductor products in India further exemplifies the spirit of partnership required to nurture this nascent industry.

India's Competitive Position and Challenges

While India's aspiration to emerge as a semiconductor hub is commendable, analysts emphasize the need for the nation to navigate its path with caution. The performance of India's semiconductor manufacturing industry pales in comparison to that of China, which reclaimed its status as India's largest trading partner in the financial year 2024, with bilateral trade reaching $118.4 billion. China's exports of telecom and smartphone parts to India amounted to $4.2 billion, highlighting the significant gap between the two nations in semiconductor manufacturing capabilities.

Rishi Bhatnagar, chair of the Institution of Engineering and Technology's future tech panel, underscores the imperative of collaboration rather than competition between India and China. Recognizing the global dynamics at play, Bhatnagar emphasizes the need for India to learn from China's technological advancements and build its semiconductor industry through strategic partnerships.

The Role of the United States and Global Collaborations

India's pursuit of semiconductor excellence has attracted the interest of international stakeholders, particularly the United States. In a bid to strengthen the global semiconductor value chain, the U.S. Department of State announced its collaboration with the India Semiconductor Mission and India's electronics and IT government body. This partnership aims to enhance the semiconductor ecosystem and facilitate the exchange of knowledge and resources between the two nations.

The engagement with U.S. tech giants signifies a pivotal moment for India, as industry leaders express their commitment to partner with the country in its semiconductor endeavors. During a roundtable meeting in New York, Modi engaged with prominent figures such as Nvidia's Jensen Huang and Google's Sundar Pichai, who acknowledged the significance of India's moment and pledged their support. The presence of CEOs from semiconductor companies, including GlobalFoundries and AMD, further underscores the growing international interest in India's semiconductor aspirations.

Overcoming Infrastructure and Investment Hurdles

While India possesses inherent advantages, including a competitive labor cost structure, experts caution against underestimating the infrastructure and investment challenges the country faces in its quest to become a semiconductor powerhouse. Piyush Goyal, India's minister of commerce and industry, emphasizes the importance of building a robust ecosystem to attract more foundries and facilitate chip manufacturing in the country.

Leveraging India’s Advantages to Compete Globally

Despite the hurdles, India stands to gain from its favorable labor cost dynamics, positioning itself as an attractive destination for companies seeking to diversify their supply chains away from China. The disparity in minimum wages between skilled workers in New Delhi and Beijing further reinforces India's potential to capture a share of the global semiconductor market, provided the nation can enhance its technological capabilities and offer competitively priced, high-quality products.

Strengthening Infrastructure for Semiconductor Growth

Acknowledging the pivotal role of infrastructure in facilitating semiconductor growth, the Indian government has earmarked significant capital expenditure to modernize and connect essential transport networks. Finance Minister Nirmala Sitharaman's announcement of an 11.1% increase in capital expenditure for the fiscal year 2025, with a focus on constructing railways and airports, underscores the government's commitment to creating an enabling environment for semiconductor manufacturing.

Global Supply Chain Dynamics and India's Role

In a landscape marked by increasing demand for semiconductors, India has the potential to position itself as a strategic player in the global supply chain. With the escalating need for chips across various sectors, India's manufacturing capabilities could serve as a viable solution for companies seeking to streamline costs while meeting the surging demand for semiconductor products. As companies critically assess their supply chain vulnerabilities, India's bid to emerge as a semiconductor hub aligns with the pressing need for diversification and resilience in the global semiconductor landscape. As the world steers toward a more interconnected and technology-driven future, India's aspirations in the semiconductor sector hold promising prospects for both domestic economic growth and global supply chain resilience.