India’s heavy reliance on imported semiconductors has emerged as a major economic and national‑security vulnerability, according to a new NITI Aayog report titled “Future of India’s Semiconductor Industry.” The report warns that India currently imports 90–95% of all chips it uses, and domestic demand is projected to surge from $90 billion by 2030 to more than $200 billion by 2035, driven by electronics manufacturing, data‑centre expansion, electric vehicles, ADAS systems and rapid AI adoption.
Between FY 2017 and FY 2025, India spent nearly $150 billion on semiconductor imports. If current trends continue, annual import costs could rise to $240 billion by 2035, widening the gap between demand and domestic capability. The report calls this dependence both a strategic vulnerability and a massive opportunity.
NITI Aayog argues that India must stop trying to catch up with global leaders in cutting‑edge chip fabrication and instead focus on areas where it can become irreplaceable in the global supply chain. The roadmap recommends shifting away from the race to build the world’s most advanced chips and prioritising:
- Advanced packaging
- System integration
- Manufacturing scale
- Mature‑node chip production
- Semiconductor design
- Compound semiconductors such as Silicon Carbide (SiC) and Gallium Nitride (GaN)
The report also highlights the risks of global supply‑chain concentration. Most semiconductor production remains clustered in China and Taiwan, making the world vulnerable to geopolitical tensions, natural disasters and trade disruptions.
Building a domestic ecosystem will require enormous investment. Semiconductor manufacturing is among the world’s most capital‑intensive industries: analogue fabs need over $5 billion, while advanced‑node fabs can exceed $15 billion. Overall, India will need $135–180 billion in capital expenditure over the next decade to build fabrication, packaging and related infrastructure.
NITI Aayog concludes that India must urgently address its semiconductor dependence to safeguard economic growth and national security.