India’s semiconductor ecosystem is entering a new phase, with rising domestic demand, manufacturing investments and technology partnerships beginning to reshape the country’s position in the global chip value chain.
The momentum spans across market expansion, telecom manufacturing, semiconductor engineering and growing dependence on chips across industries.
An EY-IESA report projects India’s semiconductor market to reach USD 200 billion by 2035, while 24 companies have proposed Rs 5,500 crore investment for Asia’s first telecom manufacturing zone in Gwalior.
India’s semiconductor momentum is accelerating, with Tessolve’s acquisition plans, HCLTECH report highlighting rising enterprise chip dependence and new commitments emerging from SEMICON India 2026.
SEMICON 2026, concluded under the theme “Silicon to Systems: Building the Ecosystem”, with India’s semiconductor push moving closer to an ecosystem-building phase, as global chip majors explored partnerships around local talent, equipment and manufacturing.
ASML, Applied Materials and Lam Research announced or advanced investments spanning lithography, process equipment and component manufacturing, while Tata Electronics signed 16 vendor agreements covering machinery, materials, specialized gases and logistics.
The event’s conclusion underscored that the manufacturing opportunity extends beyond fab announcements and requires:
to build a competitive semiconductor industry.
With 56 MoUs and initiatives across fabrication, advanced packaging and materials, SEMICON India 2026 highlighted India’s gradual progress toward developing the supplier depth required for scalable semiconductor manufacturing.
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India’s semiconductor market is projected to grow from nearly USD 64 billion in 2026 to USD 200 billion by 2035, but the bigger manufacturing story is the gap between demand and domestic capability.
EY-IESA notes that semiconductor imports surged from USD 5.7 billion in FY17 to USD 30.3 billion in FY25, highlighting the need to convert consumption into local value addition.
The report’s less-emphasized opportunity lies beyond fabs: advanced packaging, compound semiconductors, photonics, chip-to-system integration, specialty chemicals, semiconductor equipment and shared manufacturing infrastructure could deepen India’s supplier base.
With nearly 20 percent of global chip-design talent, India has an existing engineering foundation-but scaling wafer fabrication, process engineering and commercialization will determine how much of the projected market is captured domestically.
Union Minister Jyotiraditya Scindia announced the proposed Gwalior Telecom Manufacturing Zone, has attracted the attention of 24 firms having expressed interest in investing a combined Rs 5,500 crore in the project.
The initiative could mark a shift from telecom assembly towards a more integrated manufacturing ecosystem.
While the investment proposals and expected employment have received attention, the larger opportunity lies in building component manufacturing, testing infrastructure and domestic supplier networks.
According to the Press Information Bureau (PIB), the initiative is being planned as an ecosystem of 24–25 telecom manufacturing units, while the Department of Telecommunications has proposed a Common Testing Lab package worth approximately Rs 500 crore.
This could help manufacturers develop optical fiber, network equipment, RF modules, power electronics and other critical telecom hardware closer to end production.
If supplier localization accompanies factory expansion, Gwalior could help India move beyond equipment assembly towards higher domestic value addition and stronger telecom supply chains.
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Tessolve’s planned acquisitions of one US and one Indian semiconductor firm could strengthen India’s position in the higher-value layers of chip manufacturing.
While the USD 500 million revenue target draws attention, the bigger manufacturing story is the expansion of Tessolve’s technological and production capabilities.
Tessolve says its acquisitions are aimed at adding capabilities and geographic reach, while its USD 150 million funding round is supporting advanced test labs and global delivery centres.
With AI chips and data-centre work already contributing at least 25 percent of revenue, the strategy could deepen India’s chip validation, semiconductor testing, design verification and test engineering capabilities.
Such capacity is critical for converting India’s strong chip-design talent into scalable manufacturing support and reducing dependence on overseas testing infrastructure.
Semiconductor dependence is rising sharply across industrial sectors, but HCLTech’s findings point to a deeper manufacturing challenge: system integration.
Its survey of 300 global senior leaders found 98 percent of enterprises are more dependent on semiconductors than three years ago, while 75 percent in industrial automation reported significantly higher reliance.
The less-emphasised opportunity for India lies beyond chip availability. As 66 perecent of enterprises expect to move away from largely off-the-shelf silicon within five years, demand could grow for custom silicon, hardware integration, firmware development and design verification.
For India, this creates scope to build stronger engineering services, chip design and system validation capabilities around domestic semiconductor manufacturing.
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