India Semiconductor Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

India Semiconductor Market Trends and Insights

Government Incentive Schemes (PLI, DLI)

A combined outlay of INR 760 billion (USD 9.1 billion) under the Production Linked Incentive and Design Linked Incentive programs is lowering capital costs by as much as 50% for qualified projects, making greenfield fabs commercially viable where they once were prohibitive. Tata Electronics began site preparation for a 300-millimeter facility in Dholera that targets 50,000 wafer starts per month at mature nodes, and Micron Technology’s back-end plant in Sanand dispatched its first packaged memory in late 2024. The Union Budget 2025 further eliminated customs duties on lithography tools and ultrapure gases, trimming build-out timelines and import barriers. Collectively, these fiscal levers are steering the India semiconductor market toward a more vertically integrated footing.

Rapid Electrification of Transport

Electric-vehicle sales are rising precipitously under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme, which allocates INR 100 billion (USD 1.2 billion) to charging infrastructure. Higher voltage drivetrains require silicon-carbide MOSFETs, insulated-gate bipolar transistors, and power-management ICs, boosting demand for devices that India has historically imported. Automotive end-user revenue is therefore forecast to grow at an 8.66% CAGR, the fastest among all verticals. The upcoming Dholera fab will dedicate part of its capacity to analog power-management ICs and microcontrollers for electric two-wheelers and passenger cars, narrowing supply-chain exposure to offshore foundries.

5G Roll-out and BharatNet Fibre Expansion

BharatNet Phase III has awarded INR 1.39 trillion (USD 16.7 billion) in contracts to extend fiber connectivity to 270,000 villages by 2030.^{[1]Department of Telecommunications, “National Broadband Mission,” dot.gov.in} Optical line terminals and dense wavelength-division multiplexing equipment embed laser diodes, photonic integrated circuits, and application-specific ICs, widening the market for optoelectronic and mixed-signal devices. Communication equipment already accounted for 32.87% of 2025 demand, and the rural build-out is expected to keep that share resilient even as automotive demand rises. The HCL-Foxconn joint venture in Uttar Pradesh illustrates how localized display-driver IC production can feed both smartphone and base-station ecosystems.

Data-Center and AI Workloads

Maharashtra, Karnataka and Telangana are witnessing a wave of tier-IV data-center construction, each facility requiring tens of thousands of high-bandwidth-memory stacks and custom accelerators. To support this surge, Intel and ARM opened 2-nanometer design centers in Bengaluru in 2025, underscoring confidence in local engineering talent for cutting-edge node designs. The Ministry of Electronics and Information Technology’s AI Mission earmarked INR 103.72 billion (USD 1.25 billion) for GPU procurement and public compute infrastructure, indirectly stimulating domestic packaging demand for memory and interconnect devices.

Skill Shortage in Advanced-node Engineering

The India Electronics and Semiconductor Association estimates a shortfall of 300,000 engineers across design, fabrication and test disciplines, despite a projected need for 85,000 additional professionals by 2027.^{[2]India Electronics and Semiconductor Association, “Workforce Skill Gap Report,” iesaonline.org} Local universities are expanding curricula, and the India Semiconductor Mission has set aside INR 5 billion (USD 60 million) for scholarships and apprenticeships, yet attrition rates above 20% persist in key design hubs. The talent squeeze risks delaying tape-outs and stretching ramp-up timelines, especially for 2-nanometer and below.

Limited Ultrapure Water and Power Infrastructure

A 300-millimeter fab consumes up to 4 million liters of ultrapure water daily and draws upward of 100 megawatts of continuous power. Tata Electronics is investing INR 30 billion (USD 360 million) in desalination and reverse-osmosis facilities at Dholera because municipal supply cannot meet the 18-megohm-centimeter purity standard. Similar power reliability challenges in Gujarat and Punjab necessitate dedicated feeders and on-site substations, adding 8-12% to project capital expenditure and elongating payback periods.

Segment Analysis

By Discrete Semiconductor Device Type: Power Conversion Drives Diode Momentum

Transistors held 48.92% of discrete-device revenue in 2025, yet diodes are expected to grow at a 7.82% CAGR to 2031 as electric-vehicle chargers and renewable-energy inverters favor silicon-carbide Schottky designs that minimize switching losses. The India semiconductor market size for discrete diodes is therefore set to expand in line with nationwide charger rollouts linked to the FAME program. Varistors, thyristors and transient-voltage suppressors remain relevant for surge protection in telecom and consumer devices, ensuring a balanced product mix.

Cyient-Azimuth’s ARKA GKT-1 system-on-chip, slated for mid-2026 production, integrates gate drivers and MOSFETs on one die, shrinking board space for two-wheeler OEMs. The Design Linked Incentive scheme’s emphasis on compound semiconductors is poised to unlock domestic gallium-nitride transistor development, reducing import reliance for 5G base-station equipment and satellite terminals. Across industrial automation and UPS applications, insulated-gate bipolar transistors continue to dominate high-current switching, anchoring transistor demand even as diode shipments accelerate.

Note: Segment shares of all individual segments available upon report purchase

By Optoelectronics Device Type: Laser Diodes Gain on Data-Center Interconnects

Light-emitting diodes commanded 38.83% of optoelectronic revenue in 2025, but laser diodes are projected to outpace with an 8.02% CAGR, reflecting data-center upgrades to 400-gigabit and 800-gigabit Ethernet. Image sensors, chiefly CMOS, service a buoyant smartphone market of more than 150 million annual shipments, while optocouplers enable galvanic isolation in industrial motor drives.

India’s local optoelectronics output remains nascent, with over 80% of parts imported, prompting the phased manufacturing program to offer 15% capital subsidies for photonic IC fabs.^{[3]Ministry of Electronics and Information Technology, “Phased Manufacturing Programme,” meity.gov.in} BharatNet’s fiber build-out will require roughly 50 million optical transceivers by 2030, creating a sizable captive market for vertical-cavity surface-emitting lasers. Initiatives in Kerala and Telangana are exploring photonics assembly lines, signaling early-stage regional diversification within the India semiconductor market.

By Sensors and MEMS Device Type: Actuators Surge in Automotive Safety Systems

Pressure sensors accounted for 51.66% of sensors and MEMS revenue in 2025, yet actuators are forecast to register the fastest growth at 8.22% CAGR through 2031 as adaptive cruise control, lane-keeping assist and automated parking become standard features. Magnetic-field sensors enable brushless DC motor commutation in electric scooters, whereas acceleration and yaw-rate sensors underpin electronic stability control in passenger cars.

The Semi-Conductor Laboratory fabricates MEMS on 150-millimeter wafers using deep reactive-ion etching, capabilities demonstrated by the MEMS acoustic sensor that flew on ISRO’s PSLV-C55 mission.^{[4]Semi-Conductor Laboratory, “SCL Mohali Modernization Project,” scl.gov.in} IIT Madras announced an indigenous MEMS gyroscope in October 2025, signaling domestic design maturity. As OEMs specify piezoelectric and electrostatic actuators for mirror adjustment and brake-by-wire, the India semiconductor market share of domestic MEMS suppliers is poised to rise from a low single-digit base.

Note: Segment shares of all individual segments available upon report purchase

By End-User Industry: Automotive Outpaces Communication on EV Momentum

Communication equipment comprised 32.87% of 2025 revenue, powered by 5G base-station rollouts and robust smartphone demand. Automotive, however, is projected to expand at 8.66% CAGR as semiconductor content per electric vehicle approaches USD 1,000, roughly double that of internal-combustion counterparts.

Electric-vehicle battery management, on-board chargers, and advanced driver-assistance modules together lift analog, microcontroller, and power-transistor volumes. Consumer electronics remain a significant end-user, yet lengthening replacement cycles temper growth. Industrial automation benefits from Make in India policies that encourage local sourcing of programmable logic controllers and servodrive ICs. Data-center operators in Maharashtra and Karnataka continue to build GPU-rich clusters that favor high-bandwidth memory and chiplet-based processors, adding another growth vector for the India semiconductor market.

Geography Analysis

North India emerged as the leading contributor to revenue in 2025, underpinned by the HCL-Foxconn INR 37 billion (USD 444 million) display-driver IC plant in Jewar and the INR 45 billion (USD 540 million) modernization of the Semi-Conductor Laboratory in Mohali. Delhi NCR hosts design centers for Intel, Qualcomm, and MediaTek, concentrating on analog layout and verification skills. Haryana’s proximity to automotive OEMs fosters demand for microcontrollers and sensors, whereas Rajasthan’s renewable-energy corridors drive power-transistor uptake. Infrastructure bottlenecks around ultrapure water and grid stability persist but are being mitigated through dedicated feeders and desalination investments.

West India is on track to be the fastest-growing region through 2031. Gujarat’s Dholera Special Investment Region houses Tata Electronics’ INR 910 billion (USD 10.9 billion) fab, while Micron Technology’s INR 225 billion (USD 2.7 billion) assembly and test facility in Sanand shipped its first DRAM modules in 2024. Maharashtra’s automotive corridors and hyperscale data centers add incremental demand for analog and optoelectronic devices. Goa and Mumbai contribute niche production in consumer electronics and laser packaging, respectively, though environmental clearance processes have elongated project gestation by up to a year.

South India retains its status as the nation’s chip-design nucleus. Bengaluru alone hosts more than 300 design outfits, including newly inaugurated 2-nanometer centers from Intel and ARM. IIT Madras showcased the 7-nanometer SHAKTI processor in October 2025, illustrating sovereign micro-architecture ambitions. Telangana’s Hyderabad serves as Qualcomm’s largest design hub outside the United States, while Tamil Nadu’s manufacturing clusters assemble printed circuit boards and power supplies. Andhra Pradesh and Kerala are courting optoelectronics and photonics investors, although time-to-market remains uncertain. East and Northeast India trail the other regions but are beginning to court assembly and test ventures, primarily through state-level incentives.