India to Meet 50% of Semiconductor Demand via Domestic Plants by FY35: MeitY

India is accelerating its push toward semiconductor self-sufficiency, aiming to meet half of its domestic demand through local production by FY35, backed by government initiatives and rising investments.

India Aims to Meet Half of Semiconductor Demand Domestically by FY35

Ambitious Push Toward Semiconductor Self-Reliance

India is setting its sights on a major milestone in its technology and manufacturing journey achieving 50 per cent self-reliance in semiconductor demand by the financial year 2035. According to estimates from the Ministry of Electronics and Information Technology (MeitY), domestic manufacturing capabilities are expected to expand significantly over the next decade.

With several semiconductor fabrication and assembly units already in the pipeline, the country is moving toward reducing its heavy dependence on imports. Officials indicate that a portion of these manufacturing facilities could begin commercial production as early as this year, marking the beginning of India’s transition into a semiconductor-producing nation.

Rising Import Bill Driving Urgency

India’s growing dependence on semiconductor imports has become a key concern for policymakers. The country’s semiconductor import bill has surged sharply over recent years, crossing $30.3 billion in FY25. This marks a substantial increase from $19.3 billion in FY23 and $11.9 billion in FY19.

Such rising imports place a significant burden on foreign exchange reserves, making it crucial for India to develop domestic capabilities. By boosting local production, the government aims to reduce this financial strain while strengthening economic resilience.

India Semiconductor Mission Accelerates Growth

The India Semiconductor Mission has played a pivotal role in advancing the country’s chip manufacturing ecosystem. Under this initiative, 12 projects have already received government approval, with at least four expected to commence commercial operations within the current year.

These projects are designed to establish a robust manufacturing base, covering various segments of the semiconductor value chain. The government is also planning an upgraded version of the scheme, India Semiconductor Mission 2.0, with an estimated budget of ₹1 lakh crore. This expanded program will focus on building a comprehensive ecosystem, including the production of essential materials such as chemicals, gases, and advanced machinery.

Strong Growth in Domestic Electronics Demand

India’s push toward semiconductor self-sufficiency is closely linked to its broader ambitions in electronics manufacturing. The country aims to achieve a total electronics production value of $500 billion by FY30, which is projected to grow further to $750 billion by FY35.

As demand for smartphones, consumer electronics, automotive systems, and industrial technologies continues to rise, the need for semiconductors is expected to grow exponentially. This makes the development of a domestic chip industry not just desirable but essential.

Rapid Growth in Semiconductor Demand

According to projections by NITI Aayog, India’s semiconductor demand is expected to reach $206 billion by 2035, representing a five-fold increase from the estimated $44 billion in FY26. This rapid growth underscores the importance of building local manufacturing capacity to meet future requirements.

Between 2017 and 2025, India imported semiconductor products worth approximately $150 billion. These imports grew at a compound annual growth rate (CAGR) of 23 per cent. If this trend continues, total imports could reach $240 billion by 2035, further highlighting the urgency for domestic production.

Global Competition in Semiconductor Self-Sufficiency

India’s semiconductor ambitions align with global trends, as several countries are investing heavily to reduce reliance on imports. China, for instance, aims to increase its semiconductor self-sufficiency from around 20 per cent to 50–60 per cent by 2030. Germany is also working toward achieving 20 per cent self-reliance while expanding its production capacity to $100 billion.

These global efforts underline the strategic importance of semiconductors, which are essential components in modern technologies ranging from smartphones to defence systems.

Emerging Domestic Manufacturing Ecosystem

India is steadily building a comprehensive semiconductor ecosystem. By 2035, the country is expected to establish an industry valued at approximately $120 billion. This ecosystem will include fabrication plants producing mature nodes, logic chips, specialty analog semiconductors, and compound semiconductors.

Key players such as Tata Group, CG Power, and Kaynes are at the forefront of this transformation. Their semiconductor plants are projected to collectively produce around 69 million chips per day once they become operational.

Introduction of Micro-LED Technology

As part of its broader strategy to enhance domestic electronics manufacturing, the government has also approved projects to introduce advanced technologies like micro-LED displays in India. These next-generation chips are expected to be produced within the next 22 months.

Micro-LED chips, ranging in size from 30 microns to 125 microns, are considered highly efficient and are expected to play a significant role in the future of display technologies across devices such as televisions, smartphones, and wearables.

Reducing Foreign Exchange Outflow and Boosting Localisation

The development of a domestic semiconductor industry is expected to significantly reduce India’s reliance on imports, thereby lowering foreign exchange outflow. Additionally, it will increase localisation levels, create employment opportunities, and strengthen the country’s position in global supply chains.

By building capabilities across the entire value chain — from design and fabrication to packaging and testing — India aims to become a key player in the global semiconductor market.

The Road Ahead for India’s Semiconductor Industry

While the roadmap is ambitious, achieving semiconductor self-reliance will require sustained investments, policy support, and collaboration between government and industry stakeholders. Challenges such as high capital costs, technological complexity, and global competition remain significant.

However, with strong policy backing and increasing private sector participation, India is well-positioned to make substantial progress in this critical sector. The coming decade will be crucial in determining whether the country can successfully transform into a global semiconductor manufacturing hub.