India’s economy stands at a historic inflection point, entering a new era of technological self-reliance. The nation’s goal is not merely to remain a consumer of chips but to join the ranks of the world’s most important semiconductor nations by 2035. This vision holds the potential to completely transform India’s technological sovereignty and its role in the global supply chain.
Economic analysis and government estimates suggest that India will establish a deep foothold in chip manufacturing and design over the next few years. This ambition is not limited to paper; it is grounded in concrete policies and targets.
Let’s explore what this situation implies for the stock market and investors.
What’s Happening?
India is now moving rapidly in a direction where it can make its mark in the world’s most advanced chip technologies in the coming years. According to Union Minister Ashwini Vaishnaw, the government aims to manufacture state-of-the-art small chips with 3-nanometer nodes in the country by 2032. These are the very chips that power today’s modern smartphones and computers. This target not only signals an increase in technical capability but also reflects the ambition to secure a new place for India on the global semiconductor map.
Simultaneously, the government has announced a special focus on six critical categories of chips: Compute, Radio Frequency, Networking, Power, Sensor, and Memory under the second phase of the Design-Linked Incentive (DLI) scheme. Establishing a strong hold in these sectors will give Indian companies control over the development of 70 to 75% of technical products. This will not only reduce dependence on imports but also create an indigenous and competitive high-tech ecosystem within the country.
New Flight of India’s Fabless Chip Startups
The Design Linked Incentive (DLI) scheme has so far enabled 24 startups. Many of these have completed the tape-out of their chip designs, validated products, and even achieved initial market success. This progress demonstrates that the government model for overcoming the biggest hurdles faced by semiconductor startups such as access to advanced design tools, IP libraries, wafers, and tape-out support has been entirely successful.
Furthermore, the support provided by the India Semiconductor Mission will become even more comprehensive in the next phase. The government aims to develop at least 50 fabless semiconductor companies in the coming years that can compete with leading international players. Union Minister Shri Ashwini Vaishnaw expressed confidence that in the near future, such fabless companies will emerge in India and register the country’s strong presence on the global semiconductor map.
Why is India’s Chip Manufacturing Capacity Becoming Important?
It is estimated that approximately 20% of the world’s semiconductor engineers are in India. Amitesh Kumar Sinha, Joint Secretary of the Ministry, points out that almost every major global chip company has its largest or second-largest design centre in India. However, the shock the industry suffered due to halted chip supplies during COVID-19 pandemic made it clear that design capability alone is not enough.
That is why India is now building its own indigenous semiconductor ecosystem to de-risk the supply chain and increase production capacity. Chip manufacturing happens in three stages: Design, Wafer Fabrication, and OSAT (Assembly, Test, and Packaging). India is strong in design, fabrication is dominated by countries like Taiwan, and now India’s focus is on OSAT.
Ashok Chandak, President of the India Semiconductor Association, states that starting assembly and testing is easier compared to fabs, and India is preparing its foundation in this very direction.
What Does This Mean for Investors?
Estimates by the IMARC Group suggest that India’s semiconductor market could reach a value of $177 billion by 2034, signaling a strong Compound Annual Growth Rate (CAGR) of 12.18% between 2026 and 2034. These figures show that while the semiconductor industry is in its nascent stage, it holds the potential for rapid expansion in the coming years.
However, this is a sector where both enthusiasm and speculation are abundant. Therefore, it is essential for investors to evaluate deeply and identify companies that possess the strongest fundamental base.
What’s Next?
Union Minister Shri Ashwini Vaishnaw expressed confidence that a large portion of global semiconductor design will be developed in India in the coming years, as the country’s startups, engineers, and innovators are developing their own IPs, patents, and new companies. He stated that this shift will establish India not just as a consumer, but as a technology creator.
Outlining the direction ahead, the Minister said that by 2029, India will achieve the capability to design and manufacture chips required for approximately 70–75% of domestic needs. Based on this, the next phase of Semicon 2.0 will focus on advanced manufacturing technologies, with a clear roadmap prepared to reach the 3-nanometer and 2-nanometer levels.
India’s goal is to be included among the world’s major semiconductor nations by 2035, a position that could completely transform India’s technological identity in the coming decade.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
