Future of India’s Semiconductor Industry: NITI Aayog’s 2035 Roadmap

In May 2026, the NITI Aayog Frontier Tech Hub released Future of India’s Semiconductor Industry, India’s first comprehensive 10-year roadmap for the semiconductor sector. 

• The global semiconductor industry is projected to exceed USD 1.5 trillion by 2035, driven by rapid technological advancements and digital transformation.
• Major growth drivers include Artificial Intelligence (AI), 5G/6G communications, Electric Vehicles (EVs), industrial automation, edge computing, and data centres.

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About ‘Future Of India’s Semiconductor Industry Roadmap’

• The Future of India’s Semiconductor Industry report presents a strategic blueprint to establish a USD 120–150 billion semiconductor ecosystem by 2035. 
  • Instead of competing directly in the capital-intensive global race for cutting-edge wafer fabrication, the roadmap proposes a differentiated “More-than-Moore” strategy. 
• It emphasizes achieving manufacturing leadership in mature-node semiconductors, expanding advanced OSAT (Outsourced Semiconductor Assembly and Testing) capabilities, and developing expertise in wide-bandgap semiconductor materials such as silicon carbide and gallium nitride.

Key Findings of the Report

• High Import Dependence: India remains heavily reliant on imports, with 90–95% of domestic semiconductor demand being met through foreign supplies, creating significant strategic vulnerabilities.
• Rapidly Expanding Market: Fueled by growth in electronics manufacturing, electric vehicles (EVs), artificial intelligence, and data centres, India’s semiconductor demand is projected to reach USD 200 billion by 2035.
• Rising Import Burden: Semiconductor imports have already cost India nearly USD 150 billion between FY2017 and FY2025, reflecting substantial pressure on foreign exchange reserves.
• Future Import Challenge: Without major domestic capacity expansion, the annual semiconductor import bill could rise sharply to USD 240 billion by 2035.
• Strong Design Talent Base: India hosts nearly 20% of the global semiconductor design workforce, providing a strong foundation for innovation-led growth.
• Large Investment Requirement: Building a globally competitive ecosystem of fabs, design centres, and advanced packaging facilities will require USD 135–180 billion in investments over the next decade.
• Global Market Ambition: India aims to secure 10–13% of the global semiconductor market by 2035 through expansion of domestic manufacturing, design, and innovation capabilities.
• Shift Towards Ecosystem Maturity: Under India Semiconductor Mission (ISM) 2.0, policy focus is evolving from creating basic manufacturing capacity to strengthening R&D, intellectual property (IP), advanced packaging, and integrated semiconductor capabilities.

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Five Strategic Pillars (5Ps) of India’s Semiconductor Roadmap

• Pioneering (Innovation & R&D): Focus on R&D, AI-driven semiconductor engineering, indigenous IP creation, and advanced chip design to position India as a leader in frontier semiconductor technologies.
  • Key initiatives include sovereign access to EDA tools, National Design & Packaging Co-design Platform, AI-enabled Semiconductor Engineering Mission, Frontier Semiconductor Research Programme, and Strategic IP & Patent Programme.
• Policy & Investment (Enablers & Trust)
  • Build a predictable ecosystem through a stable policy framework, single-window clearances, full-stack incentives, demand creation mechanisms, and a National Semiconductor Capital Framework.
  • The government should provide USD 45–60 billion as anchor capital to attract large-scale private investment and de-risk semiconductor projects.
• Production (Fabs & Packaging)
  • Prioritise wafer fabrication, advanced packaging, OSAT (Outsourced Semiconductor Assembly and Testing), materials, substrates, and mission-critical manufacturing capabilities.
  • The strategic objective is to make India a top-three global hub for advanced packaging and semiconductor integration services.
• People (Talent & Skilling)
  • Develop a robust talent pyramid comprising fab-ready technicians, manufacturing and design engineers, advanced researchers, and system architects.
  • Key measures include establishing a National Fab Academy, semiconductor-focused ITIs and polytechnics, industry-academia collaborations, and global talent infusion programmes.
• Partnership (Ecosystem & Global Integration)
  • Strengthen cooperation with strategic partners such as the United States, Japan, European Union, and South Korea to accelerate ecosystem development.
  • Focus areas include technology transfer, frontier R&D, critical minerals, advanced packaging, talent exchange, and integration into global semiconductor supply chains.

Major Challenges in India’s Semiconductor Ecosystem

• Technological Complexity: Semiconductor development is becoming increasingly complex due to AI chips, GPUs, advanced nodes, EDA tools, and next-generation architectures, requiring constant innovation and technological upgrades.
• Talent Shortage: India faces a shortage of specialised professionals in VLSI design, lithography, etching, advanced packaging, materials engineering, testing, and validation, which are critical for semiconductor manufacturing.
• Resource Intensive Nature: Semiconductor fabrication requires huge amounts of uninterrupted electricity, ultra-pure water, and sophisticated cleanroom infrastructure, making operations highly resource-intensive and costly.
• High Capital Requirement: Building a globally competitive semiconductor ecosystem will require an estimated USD 135–180 billion investment over the next decade across fabs, packaging, design, and supporting infrastructure.
• Long Gestation Period: Semiconductor projects involve long development cycles, with fabs typically taking 4–5 years to begin production, resulting in delayed returns on investment and prolonged ecosystem development.

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Potential Outcomes by 2035

• Design Leadership: India aims to develop 100+ advanced semiconductor IPs and emerge as a global leader in Artificial Intelligence (AI), Quantum Computing, and High-Performance Computing (HPC) chip design.
• Global Market Share: The country targets capturing 10–13% of the global semiconductor market, establishing itself as a significant player in the worldwide semiconductor value chain.
• Self-Sufficiency: India seeks to meet 15–25% of its domestic chip demand by 2030 and increase this share to 35–50% by 2035, reducing dependence on imports.
• Value Retention: The objective is to retain 35–40% of semiconductor value within India by 2030 and 55–70% by 2035 through domestic design, manufacturing, packaging, and material capabilities.

Key Strategic Areas for India

• Mature Node Manufacturing: India should focus on 28–65 nm semiconductor nodes, which cater to high-volume applications such as automotive electronics, industrial equipment, power management systems, and IoT devices, enabling faster import substitution and commercial viability.
• Compound Semiconductors: Prioritising Silicon Carbide (SiC) and Gallium Nitride (GaN) technologies can help India build a competitive advantage in next-generation sectors such as electric vehicles, renewable energy systems, telecom infrastructure, and defence electronics.
• Advanced Packaging & OSAT: India aims to emerge as a global leader in advanced packaging and OSAT (Outsourced Semiconductor Assembly and Testing) through capabilities in chiplets, 2.5D/3D packaging, System-in-Package (SiP), Fan-Out Wafer-Level Packaging (FOWLP), and Panel-Level Packaging (PLP).

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Why Must India Act Now?

• Significant Import Dependence: With 90–95% of semiconductor demand met through imports, India remains highly vulnerable to external supply disruptions and global market uncertainties.
• National Security Concerns: Heavy reliance on imported chips for defence, aerospace, and strategic systems creates security risks and undermines India’s goal of technological and strategic autonomy.
• Forex Drain: India spent nearly USD 150 billion on semiconductor imports between FY17 and FY25, and without domestic capacity expansion, annual imports could rise to USD 240 billion by 2035, placing significant pressure on foreign exchange reserves.
• Societal Upliftment: Indigenous semiconductor production can enable affordable 5G/6G devices, enhanced rural connectivity, smart agriculture solutions, telemedicine services, and broader digital inclusion, supporting inclusive socio-economic development.

Way Forward

• Launching a National Semiconductor Investment Program: The Union government should establish a long-term semiconductor financing mechanism, committing USD 45–60 billion in strategic public capital over the next decade. This support can be deployed through credit guarantees, viability-gap funding, and equity participation to attract large-scale investments in fabrication facilities.
• Developing Integrated Semiconductor Manufacturing Clusters: India should create dedicated semiconductor parks with world-class infrastructure, ensuring uninterrupted power, ultra-pure water supply, advanced waste management systems, and reliable logistics networks capable of meeting the stringent operational requirements of chip fabrication plants.
• Advancing AI-Driven Chip Design Capabilities: A national mission integrating artificial intelligence with Electronic Design Automation (EDA) platforms should be launched to accelerate semiconductor design cycles, improve productivity, and expand access to advanced chip-design expertise across academia and industry.
• Strengthening Domestic Demand through Procurement Policies: Government procurement frameworks should progressively prioritize domestically manufactured semiconductors across strategic sectors such as railways, telecommunications, defence, and energy infrastructure, creating a stable and predictable demand base for local producers.
• Building a World-Class Semiconductor Talent Ecosystem: A specialized national semiconductor training institution should be established to standardize workforce development and rapidly produce skilled cleanroom technicians, process engineers, materials scientists, and advanced packaging professionals required by the industry.

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