India’s semiconductor push a strategic imperative, self-reliance critical for Viksit Bharat: NITI Aayog

NEW DELHI: India must accelerate efforts to build a domestic semiconductor ecosystem, with self-reliance in chips emerging as central to economic resilience, national security and societal upliftment, according to a new report by NITI Aayog.

While government initiatives like the India Semiconductor Mission are driving transformation and the country’s first fabrication plant in Gujarat’s Dholera is expected to commence production by 2028, the report warns that India’s semiconductor manufacturing remains nascent and the window to act is narrowing as global supply chains realign.

“With chips becoming the foundation of everything from smartphones to defence systems, countries are racing globally to build semiconductor self-sufficiency,” the report states. For India, the urgency is compounded by four factors: significant import dependence, national security risk, drain on forex, and the need for societal upliftment.

India’s local ecosystem meets just 5-10 per cent of domestic demand, with 90-95 per cent of consumption fulfilled through imports. Global supply is concentrated in a handful of countries, and disruptions in Taiwan or China could trigger shortages as seen during Covid-19, exposing automobiles, consumer electronics, healthcare and defence to “untoward disruptions in the global supply chain.” As electronic content rises, “the economic cost of such disruptions will only intensify,” the report notes.

“Chips have become increasingly important to national security and defence programmes. As many semiconductor parts used in defence systems are produced outside India, deploying them in our aerospace and defence programmes is increasing threats to national security,” it said. UAVs, naval and airborne platforms depend on semiconductor imports. A domestic source is “well positioned to safeguard the autonomy of our defence programmes” as India modernizes its capabilities.

The report noted that India spent almost USD 150 billion on semiconductor imports between FY17-FY25. Imports grew at a CAGR of 23 per cent in that period, rising from USD 5.7 billion in FY17 to USD 30.3 billion in FY25. “If this pace persists, the annual import cost could increase to USD 240 billion by 2035,” the report cautioned.

Next-gen 5G/6G technologies can expand rural connectivity, enable remote healthcare and support precision agriculture, but “the affordability of 5G/6G-enabled devices is a prerequisite.” India-made chips “will be decisive” in lowering handset costs and making benefits accessible.

India already has strengths: Leading global fabless majors run captive design centres here, leveraging a deep talent pool that accounts for 20 per cent of the global semiconductor design workforce. Firms are also making investments in assembly and packaging.

“Recognising the pivotal role of semiconductors and sustaining their growth is vital to cementing India’s position in the global value chain and building an inclusive, resilient society — both indispensable to accelerating India’s journey towards ‘Viksit Bharat 2047’,” the report said. (ANI)