New Delhi, India – August 24, 2026
India’s semiconductor market is projected to reach $155 billion by calendar year 2031, up from an estimated $62 billion in 2026, implying a compound annual growth rate of around 20%, according to a report by Kotak Mahindra Mutual Fund. The growth would take India’s share of global semiconductor consumption from roughly 6% in 2026 to approximately 9% by 2031.
“India’s semiconductor market is to reach US$ 155bn by CY31E, a 20% CAGR that would increase India’s share of global semiconductor consumption to roughly 9% by 2031E,” the report said.
What’s Driving the Growth
The report attributes the projected expansion to a combination of factors: rising domestic demand, a substantial existing chip-design workforce, sustained government incentives, and the early-stage emergence of local fabrication and packaging capacity. Kotak rated India’s current position in chip design as “Strong,” with an explicit “Leadership” ambition set for 2030, India is home to roughly 300,000 chip designers, about a fifth of the global chip-design workforce and second only to the United States.
The report also flagged a broader shift underway in India’s semiconductor ecosystem: from its established strength in design toward wafer fabrication, assembly, testing and other downstream parts of the supply chain, the layers of the industry India has historically depended on imports for.
The Import-Dependence Gap Is Substantial
Kotak’s own report is candid about how far manufacturing capability still has to travel to catch up with design strength and consumption growth. It flags continued import dependence across a long list of critical inputs, including semiconductor manufacturing equipment, speciality chemicals, electronic-grade gases, silicon wafers, and substrates or lead frames.
Separate industry estimates cited alongside the report put India’s reliance on imported fabrication equipment above 90%, with dependence on imported specialty chemicals and gases running in the 85–90% range gaps the report suggests are unlikely to close quickly regardless of how strong India’s position in chip design becomes.
Why the Gap Matters
The distinction the report draws is significant: growing semiconductor consumption in India does not, by itself, mean growing semiconductor manufacturing within India. As demand expands across smartphones, automotive electronics, industrial equipment, telecom infrastructure, defence systems and data centres, that demand can just as easily be met through imports as through domestic production, unless the manufacturing ecosystem behind chip fabrication, packaging and testing develops in parallel.
That ecosystem extends well beyond fabs and packaging plants themselves. It depends on a chain of specialised suppliers producing ultrapure materials, industrial gases and chemicals, cleanroom infrastructure, precision components, automation equipment and testing systems – segments where India’s current capability remains limited relative to demand.
Context
The Kotak projection is the latest in a series of escalating market-size estimates for India’s semiconductor sector. A separate Union Bank of India Research report in August 2026 projected India’s semiconductor market would triple to $100.2 billion by 2032, up from $34.3 billion in 2023. Earlier industry estimates from SEMICON India 2024 had placed the market above $55 billion by 2026 and over $100 billion by 2030, with an additional 600,000 jobs expected from ecosystem growth. The variation across these estimates reflects both the sector’s rapid evolution and differing assumptions about how quickly domestic manufacturing capacity will scale.
India’s semiconductor mission carries a $10 billion incentive outlay, offering up to 50% support on project costs for fabs and display manufacturing, alongside capital expenditure assistance for compound semiconductors and assembly, testing, marking and packaging (ATMP) facilities.
