India's Strategic Semiconductor Push: ISM 2.0 Targets $400 Billion Equipment Market by 2030
In a significant move to bolster domestic capabilities, the finance minister has announced the launch of ISM 2.0, a strategic initiative aimed at building India's presence in the semiconductor equipment, chemicals, and gases market. According to industry bodies IESA and SEMI India, this market is projected to reach an estimated $400 billion by 2030, presenting a monumental opportunity for the nation.
Global AI Demand Creates a Golden Opportunity
This announcement comes at a critical juncture marked by global supply bottlenecks driven by escalating AI workloads. As capital expenditure and specialized equipment shift towards high-bandwidth memory and advanced DRAM for AI training and inference, global original equipment manufacturers (OEMs) are under strain. Experts highlight that this scenario offers India a rare window to develop a robust ecosystem.
Raja Manickam, founder and CEO of fabless startup iVP Semi, emphasized the urgency, stating, "The demand for new wafer fabs is extremely high because of AI. This does not happen every 10 years, so now is the time." He noted that equipment suppliers are booked for the next two to three years, creating a golden opportunity for India to enter the market. Manickam added that many companies are seeking alternatives to Chinese sourcing, making India an attractive destination with the right incentives.
Strategic Focus on Export Markets and Competitive Strengths
Sanjay Kumar, Vice President at AT-Kearney and former senior director at the US Department of Commerce's CHIPS Program office, cautioned that India must act swiftly. "Indian internal consumption is not going to match major hubs like Taiwan and Korea, so production should target export markets," he advised. Kumar stressed the need for cost benefits or superior quality compared to China or Taiwan, alongside addressing infrastructure and logistics challenges. He also pointed out that long-term viability hinges on sustained AI demands.
Ashok Chandak, President of IESA and SEMI India, outlined a pragmatic roadmap. He suggested that over the next 5-7 years, India can build competitive strength in low to mid-complexity segments such as sub-fab equipment vacuum systems, automation systems for wafer handling, precision mechanics, and advanced packaging equipment. "These segments are scalable, exportable, and already see interest from global OEMs looking to diversify tier-2 and tier-3 suppliers," Chandak explained.
Long-Term Vision and Domestic Market Potential
Chandak set ambitious targets, aiming for India to capture around 10% of the $400 million global market by 2032, with the domestic equipment market potentially reaching $5 billion by 2030. He emphasized that focusing on equipment, materials, and intellectual property is not an alternative to advanced fabs but a necessary foundation for their long-term viability. "By building upstream strength in equipment and materials, India creates a sustainable foundation that captures long-term value," he added.
Proven Capabilities and MSME Support
Industry analysts highlight that some global OEMs are already sourcing and integrating final equipment in India, demonstrating that domestic sourcing is both proven and cost-effective. However, they stress the importance of supporting existing micro, small, and medium enterprises (MSMEs) to supply precision components for the semiconductor industry. This support is crucial for scaling up India's capabilities and ensuring a resilient supply chain.
In summary, ISM 2.0 represents a strategic leap for India in the global semiconductor landscape. By capitalizing on AI-driven demand shifts and fostering domestic and MSME participation, India aims to secure a significant share of the burgeoning equipment market, paving the way for sustainable growth and technological self-reliance.
