India’s economic growth is no longer limited to traditional manufacturing. With deep tech, advanced infrastructure and a growing domestic market, India is now moving into a new industrial phase. Over the past 10 years, India has built strong digital infrastructure, including telecom penetration, rising smartphone usage, real-time payments and digital identities. On this foundation, the next wave of growth is now taking shape.
Let us understand this new industrial revolution in India.
What’s Happening?
Jefferies, in its India Equity Strategy report, has linked India’s next phase of growth to 6 sectors. These include semiconductors, space, aerospace, electronics, solar manufacturing and data centres. Jefferies considers this India’s new industrial revolution.
This growth is being supported by a large domestic market, rising private sector participation and policy support. India is already a major manufacturer of steel, cement, automobiles and refined products. In addition, India is also an important producer of mobile phones and solar modules.
Now, the challenge is to take these capabilities towards more complex manufacturing. The government opened the space sector to private companies in 2020. Tax holidays for data centres and incentive schemes for semiconductors, electronics and solar manufacturing have also been introduced.
Semiconductors and Space Sector
In semiconductors, India is now moving from announcements to execution. Investments of about $20 billion have been triggered. One chip fabrication plant is under construction, while several Outsourced Semiconductor Assembly and Test (OSAT) projects are moving towards production. The government has also launched the second phase of its semiconductor programme, with an outlay of about $13 billion.
Private participation is also rising in the space sector. The target is to take the space economy to $40 to $45 billion by 2030, compared with $8.4 billion in 2023. This means the target is to achieve nearly five-fold growth.
In 2026, there are more than 400 space startups in India. Players like Skyroot Aerospace, Pixxel, Agnikul Cosmos and Digantara are moving from innovation to commercial execution. India is among the select spacefaring nations with competitive capabilities.
Electronics, Solar and Aerospace Sector
The electronics sector is no longer limited to assembly, and value addition is rising. Local value addition in the mobile component bill of materials can rise from less than 20% to 50% over the next six years. The PCB market, worth about $5 billion, is still dependent on imports. Schemes like the Electronics Component Manufacturing Scheme (ECMS) and MPMS (Mobile 2.0) are strengthening the supply chain.
In the solar sector, India is the second-largest solar photovoltaic manufacturer. There is currently 35 GW of operational cell capacity, while 100 GW of capacity is under construction. By 2030, 90% of the value chain is expected to be localised.
In aerospace, global supply constraints are creating opportunities for India. Boeing and Airbus source $1.4 to $1.6 billion annually from India. Aequs, Azad Engineering, Bharat Forge, Dynamatic, MotherSon and Sansera have become global tier-1 suppliers.
What Does This Mean for Investors?
Data centres are the biggest capital-intensive opportunity. Colocation capacity has risen five-fold over the past five years to 2 GW. Over the next five years, it is expected to rise another five-fold to 10 GW. This could create a facility capital expenditure opportunity of $45 billion and a revenue opportunity of $9 billion. This investment will go into construction, real estate, power equipment, cooling solutions and network infrastructure.
The space sector rising from $8.4 billion to $40-45 billion, investments of $20 billion in semiconductors with an outlay of $13 billion, and localisation of the $5 billion PCB market in electronics give this theme multi-year visibility. With policy backing and a large domestic market, private capital is also rising.
What’s Next?
Going forward, growth in these sectors will also create opportunities in power generation, grid connectivity, cooling and advanced materials. The common drivers of all these sectors are local supply chains, domestic demand, policy backing and private participation.
However, challenges such as supply chain depth, skilled workers and global competition will remain. Despite this, India is moving beyond assembly and imports towards manufacturing, localisation and global supply chain integration. This is a multi-decade opportunity.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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