India's chip market seen tripling to USD 200 billion by 2035

India's semiconductor market is set to expand more than threefold over the next decade, rising from close to USD 64 billion in 2026 to USD 200 billion by 2035, according to an EY-IESA report released at the SEMICON India 2026 industry event.

The report, titled Semicon India 2.0: From capacity creation to ecosystem leadership, frames the growth as a chance to turn domestic demand into local manufacturing, design capability and more resilient supply chains.

Consumer electronics remains the largest end market, accounting for 30 per cent of semiconductor consumption, followed by automotive at 16 per cent and industrial applications at 15 per cent. Artificial intelligence, data centres, telecommunications, electric mobility and advanced manufacturing are identified as emerging sources of demand.

The scale of the import bill underlines the gap that domestic production could fill. Semiconductor imports climbed more than fivefold from USD 5.7 billion in FY17 to USD 30.3 billion in FY25, a compound annual growth rate of 23 per cent. India also contributes nearly 20 per cent of the world's chip design engineers, giving it a substantial talent pool for scaling fabrication, indigenous design and commercialisation.

"India now has a unique opportunity to combine its strengths in engineering talent, electronics demand, design capabilities and emerging manufacturing capacity with resilient global supply-chain partnerships," said Ashok Chandak, President of the India Electronics and Semiconductor Association. He added that the next phase would be defined by execution, innovation, technology commercialisation, indigenous intellectual property, specialised talent and ecosystem depth.

Aisha Ali Hussaini, Partner and Semiconductor Tax Leader at EY India, pointed to the broader electronics ecosystem as an enabling factor. Electronics production rose sixfold from INR 1.9 lakh crore in FY15 to INR 11.3 lakh crore in FY25, while electronics manufacturing and exports grew sevenfold and elevenfold respectively over the same period. She said the priority was to convert that scale into deeper semiconductor value addition through a connected, innovation-led ecosystem, supported by a predictable fiscal and regulatory environment, closer alignment between central and state policies, and targeted backing for emerging technologies.

To sustain momentum, the report recommends aligning state semiconductor policies with the wider Semicon 2.0 agenda, developing integrated manufacturing clusters with shared world-class infrastructure, and creating dedicated talent-certification programmes spanning design, fabrication and advanced packaging.

It identifies advanced packaging, compound semiconductors, photonics and chip-to-system integration as high-potential segments where India can build on its design strengths, growing electronics and AI demand, and nascent manufacturing base. Realising these opportunities, the report notes, will depend on policy certainty, cluster readiness and implementation speed, alongside deeper partnerships between industry, suppliers, academia and technology owners.