India needs up to USD 180 billion investment in semiconductors over ten years: NITI Aayog

Building a globally competitive semiconductor industry in India will require nearly US$135-180 billion in investment over the next decade to support design, manufacturing, advanced packaging, materials and infrastructure, government think tank NITI Aayog said in a report released on Friday.

The NITI Aayog said the union government should devote at least one-third of the required investment to weed out risky projects and anchor long-term investor confidence. This in turn could draw in private capital in a big way, he added in a report titled “Future of Indian Semiconductor Industry” issued by Finance and Corporate Affairs Minister Nirmala Sitharaman and Railways, Information and Broadcasting and Electronics and IT Minister Ashwini Vaishnaw.

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Fab technologies, advanced packaging, compound semiconductors and critical design infrastructure should be prioritized, the report said. Apart from financial support, the focus should also be on stability, predictable incentives and coordinated implementation across the value chain, he added.

Building a strong semiconductor industry has become a priority for the Modi administration, as computing powers not only the economic and industrial prowess of developed countries, but also their strategic and military capabilities. Semiconductors are also increasingly becoming a bottleneck in global trade, having recently been a sticking point in trade relations between the US and China.

NITI Aayog has suggested that a government bond of $45-60 billion over 10 years could act as anchor capital.

“Downstream materials and critical minerals are emerging as strategic choke points in the semiconductor value chain. India needs to proactively ensure long-term access to these inputs,” the report said.

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Long-term partnerships

The expert group also suggested that India establish long-term procurement and investment partnerships with resource-rich countries, particularly in Africa and other friendly regions. India should promote joint processing and refining facilities closer to resource locations and establish national coordination for critical raw material sourcing, stockpiling and risk management, the report suggests.

“Building a globally competitive ecosystem is difficult to achieve in isolation. To build such ecosystems, deep and long-term partnerships are inevitable given the scale, complexity and capital intensity of the semiconductor value chain. Partnerships are strategic tools for India to accelerate capability building, de-risking and access to frontier technologies,” NITI Aayog said.

“India needs a partnership strategy that goes beyond transactional cooperation and focuses on results-based cooperation,” the report added, suggesting potential agreements with countries such as the US, Japan and South Korea, as well as the European Union.

As semiconductor technologies are increasingly shaped by export controls, technology blocks and national security considerations, India needs to position itself as a trusted, long-term partner within a friendly and friendly semiconductor ecosystem.

Building a domestic semiconductor ecosystem is one of the strategically important industrial transformations of the next decade – all the more so as global supply chains realign and advanced electronics become central to economic competitiveness, NITI Aayog noted.

Expanding domestic production will reduce dependence on imports and create a resilient supply base for sectors such as telecommunications, automotive, defense and clean energy, she said, adding that the pace of progress in building the semiconductor ecosystem will depend on talent and research excellence.

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