India is setting an ambitious goal to achieve 50% self-reliance in semiconductor demand by the fiscal year 2035, according to estimates from the Ministry of Electronics and Information Technology (MeitY). This move aims to reduce the country's heavy dependence on imports and strengthen its technological manufacturing capabilities.
Domestic Manufacturing Capacity to Expand
Over the next decade, domestic manufacturing capacity is expected to increase substantially. MeitY estimates indicate that multiple semiconductor production and assembly facilities are already under construction. Some of these facilities may begin commercial production as early as this year, marking the start of India's transformation into a semiconductor-producing nation.
Rising Import Bill Raises Concerns
India's reliance on imported semiconductors has been a growing concern for policymakers. The country's import bill for semiconductors surged to over USD 30.3 billion in FY25, up from USD 19.3 billion in FY23 and USD 11.9 billion in FY19. These increasing imports strain India's foreign exchange reserves, prompting the government to boost domestic manufacturing to reduce the financial burden and enhance economic stability.
India Semiconductor Mission Driving Growth
The India Semiconductor Mission has been pivotal in supporting the growth of the chip manufacturing ecosystem. The government has approved 12 projects under this initiative, with at least four expected to start commercial operations this year. These projects aim to build a robust manufacturing base across various semiconductor value chain domains.
To further accelerate progress, the government is preparing an enhanced version called India Semiconductor Mission 2.0, with an estimated expenditure of Rs 1 lakh crore. This extended program will focus on building a complete ecosystem, including the manufacturing of essential components such as chemicals, gases, and advanced technology.
Future Demand Projections
NITI Aayog estimates that India's semiconductor consumption will reach USD 206 billion by 2035, a five-fold increase from the projected USD 44 billion in FY26. This rapid growth underscores the urgent need to expand local manufacturing capacity to meet future demand and achieve the self-reliance target.
