LowV Technology Geopolitics & AI19 September 2026, Saturday
EY-IESA: India's semiconductor market to grow from $64 billion in 2026 to $200 billion in 2035; imports at $30.3 billion
According to a report published on 19 September by EY and the India Electronics and Semiconductor Association, India's semiconductor market will be about $64 billion in 2026 and $200 billion in 2035. Semiconductor imports rose from $5.7 billion in FY17 to $30.3 billion in FY25.
The report EY published on 19 September 2026 as part of SEMICON India 2026 projects that the market will grow from about $64 billion in 2026 to $200 billion in 2035, more than threefold. 30% of demand comes from consumer electronics, 16% from automotive and 15% from industrial applications; AI, data centres, telecoms and electric mobility are the new growth items. Semiconductor imports rose from $5.7 billion in FY17 to $30.3 billion in FY25, a compound annual growth rate of 23%. Electronics production rose from 1.9 lakh crore rupees in FY15 to 11.3 lakh crore rupees in FY25; India is home to about 20% of the world's chip design engineers.
A YES Securities report cited by the Tribune on 22 September shows where the gap lies: semiconductor materials, specialty gases, equipment and precision manufacturing remain the weak links in the chain. According to the same report, the government budget for Semicon 2.0 is 127,500 crore rupees, and investments are expected to materialise within 2–3 years. The EY-IESA report lists advanced packaging, compound semiconductors, photonics and chip-to-system integration as priority areas.
The report's 2035 projection is an industry estimate; it could not be verified against an independent official series.
Talay assessment
Bottom line
India's chip story is strong on the demand side but still import-dependent on the supply side: with the market at $64 billion, imports have reached $30.3 billion. Unless the gaps in materials, specialty gases and equipment close, new plants will keep only a small share of value added at home. The most likely path is rapid progress in packaging and mature-node production and slow progress in front-end manufacturing.
Likely effects
- India's external balanceNegative1–6 months
Chip imports, which grew 23% a year between FY17 and FY25, will add pressure on the current account and the rupee unless domestic production rises.
- Global supply diversificationPositive6 months+
With 30% of demand coming from consumer electronics, India becomes a natural base for supply chains outside China in advanced packaging and mature nodes.
- Turkish electronics industryNegative6 months+
India's 127,500 crore rupee Semicon 2.0 budget intensifies competition in the race to attract investment for Türkiye's electronics and automotive supplier industry.
Possibilities, ranked
- 1Fast in packaging, slow at front end60%
Packaging and test facilities keep coming online, the front-end production timetable slips and imports keep rising.
Watch: Whether FY26 semiconductor imports come in above $30.3 billion
- 2Materials chain accelerates25%
Specialty gas and materials investments under Semicon 2.0 materialise within 2–3 years, and import growth slows.
Watch: Materials and gas projects approved under Semicon 2.0
- 3Incentive timetable slips15%
Fiscal pressure and rupee weakness delay incentive payments, and investment announcements are postponed.
Watch: Postponement of production start dates at approved projects
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Market size 2026▲ $64 billion
- Market target 2035▲ $200 billion
- Chip imports FY25▼ $30.3 billion