India's semiconductor market on track to reach $155 billion by 2031
India's semiconductor market is projected to grow to $155 billion by calendar year 2031, according to a report by Kotak Mahindra Mutual Fund. The forecast implies a compound annual growth rate (CAGR) of 20 per cent and would raise the country's share of global semiconductor consumption from roughly 6 per cent today to about 9 per cent by 2031.
The report, covered by multiple Indian media outlets, attributes the growth to a combination of domestic demand, a growing chip-design ecosystem, government support, and the emergence of manufacturing and packaging capabilities. It sees India's semiconductor market reaching $62 billion by 2026, with the country accounting for around 6 per cent of global consumption at that point.
Value chain evolution: from design to fabrication
The report highlights a shift in India's semiconductor value chain, moving from strengths in chip design toward fabrication, assembly, testing, and related infrastructure. India's chip-design ecosystem already employs around 300,000 designers—about 20 per cent of the global chip-design workforce—making India second only to the United States in this segment.
The report rates India's current position in chip design as "Strong," with an ambition to achieve "Leadership" by 2030. In contrast, wafer fabrication is described as "Absent" today, with a target of reaching "Pilot-Scale." Similarly, OSAT/ATMP (outsourced semiconductor assembly and test / assembly, testing, marking, and packaging) is currently "Emerging" and is targeted to become "Scaled" by 2030.
Enablers and projects driving growth
Several government and industry initiatives are cited as enablers for this transition, including the Chip-to-Startup (C2S) programme, the Design Linked Incentive (DLI) scheme, Global Capability Centres (GCCs), and general government support for semiconductor projects.
Key projects expected to bolster manufacturing and packaging include the Tata-PSMC Dholera 28nm fab, as well as initiatives involving Micron, Kaynes, and CG Semi. The report projects India's OSAT/ATMP capacity to rise significantly, from 15 million chips per day in 2026 to 48 million chips per day by 2028, with contributions from projects by CG Semi, Kaynes Semicon, Tata OSAT, and the HCL Group-Foxconn joint venture.
India's cost competitiveness in assembly and testing is highlighted as another advantage, with OSAT costs reported to be 20-30 per cent lower than those of peers. The report also notes competitive advantages including scale, a skilled talent pool, and up to 50 per cent capital expenditure support.
Market drivers and end-market demand
The report points to growing demand from end-markets such as 5G, electric vehicles, defence, and AI data centres as key drivers. It estimates India's end-market demand could reach approximately $103 billion by 2030. However, the report also acknowledges India's continued dependence on imports across several semiconductor categories, underscoring the need for further domestic capacity building.