India’s semiconductor import bill has surged to nearly $150 billion between FY17 and FY25, with NITI Aayog warning that costs could rise to $240 billion annually by 2035 if self-reliance is not achieved. 

The think tank stresses that chip independence is vital for national security, economic resilience, and India’s Viksit Bharat 2047 vision.

India’s semiconductor ecosystem remains at a nascent stage despite government initiatives such as the India Semiconductor Mission. The NITI Aayog report highlights that India currently meets only 5–10% of its semiconductor demand domestically, with 90–95% fulfilled through imports.

This dependence exposes the country to geopolitical risks, particularly given the concentration of global chip production in Taiwan, China, South Korea, and the US. Any disruption in Taiwan or China could replicate the severe shortages experienced during the Covid-19 pandemic, affecting automobiles, consumer electronics, healthcare, and defence.

The urgency is underscored by rising national security concerns. Chips are integral to defence and aerospace programs, yet many critical components used in unmanned aerial vehicles, naval systems, and airborne platforms are imported.

This reliance increases vulnerabilities in India’s defence modernisation efforts. Developing a domestic semiconductor base would safeguard autonomy in defence programs and reduce exposure to external supply chain shocks.

Economically, the import burden is escalating. India’s semiconductor imports grew at a compound annual growth rate of 23% between FY17 and FY25, rising from $5.7 billion to $30.3 billion. If unchecked, the annual import bill could reach $240 billion by 2035.

Domestic chip production would not only reduce this burden but also make next-generation technologies more affordable. Affordable India-made semiconductors could lower handset costs, enabling wider adoption of 5G and future 6G networks, which are crucial for rural connectivity, remote healthcare, and precision agriculture.

The report also points to India’s strengths in semiconductor design. The country hosts design centres of leading global fabless companies, supported by a talent pool that accounts for 20% of the world’s semiconductor design workforce.

Investments are also flowing into assembly and packaging facilities, with India aiming to build a $120–150 billion semiconductor value chain by 2035. The first fabrication plant in Gujarat’s Dholera is expected to begin production by 2028, marking a significant milestone in domestic manufacturing.

NITI Aayog’s roadmap outlines critical policy imperatives. These include mobilising long-term patient capital for capital-intensive fabs, establishing a single-window clearance mechanism, strengthening intellectual property protection, and securing critical minerals such as silicon carbide, gallium nitride, cobalt, and lithium.

Strategic partnerships with trusted nations like the US, Japan, Taiwan, and the EU are also emphasised to enable technology transfer, joint R&D, and integration into global supply chains.

The report stresses that semiconductors are no longer just industrial inputs but the foundation of national security, economic resilience, and digital sovereignty. They power everything from defence systems and telecom networks to AI infrastructure, automobiles, and healthcare devices.

Recognising their pivotal role and sustaining growth is essential to cement India’s position in the global value chain and to build an inclusive, resilient society. This is indispensable for accelerating India’s journey towards Viksit Bharat 2047.

TOI