India's rapidly expanding electronics and semiconductor market relies heavily on imports to meet its demands, and a significant portion of these imports originate from China and Hong Kong. In 2023, India's semiconductor device imports totaled $6.71 billion, making it the world's fifth-largest importer. China was the primary source, accounting for $3.85 billion of these imports. While India aims to become a global hub for semiconductor manufacturing, it currently depends on imports to bridge the demand-supply gap.
Several factors contribute to India's increasing demand for semiconductors, including the rising consumption of electronic products, the government's focus on developing a robust semiconductor manufacturing ecosystem, and the growing need for semiconductors in various sectors like automotive, medical, industrial, and consumer electronics. This dependence on imports, particularly from China and Hong Kong, has raised concerns about supply chain vulnerabilities and the need for diversification.
The Indian government has launched initiatives such as the "Semicon India" program, with a financial outlay of US$10 billion, to reduce import dependency by attracting manufacturers to set up local production units. These initiatives aim to create a self-sustaining semiconductor ecosystem within the country. Several projects are underway, including joint ventures between Indian companies and international firms, to establish semiconductor fabrication plants in India. These include Tata Group and Taiwan's Powerchip, CG Power, Renesas (Japan), and Stars Microelectronics (Thailand), and HCL and Foxconn.
Despite these efforts, India remains reliant on imports in the short term. In 2019, China, Singapore, Malaysia, Hong Kong, and Japan were the top five exporters of semiconductor devices, accounting for over 80% of the world export value. This concentration of supply in a few countries highlights the potential risks associated with geopolitical tensions and supply chain disruptions.
The situation is further complicated by the increasing demand for semiconductors driven by advancements in artificial intelligence (AI). As Hong Kong's IPO market booms, semiconductor firms are raising capital amid China's push for chip self-sufficiency. However, these firms may face challenges due to competition from established players like Nvidia and Huawei.
Qualcomm CEO Cristiano Amon noted at the World Economic Forum 2026 that India is emerging as a critical hub for electronics manufacturing as global companies diversify away from traditional supply chains in China. He pointed out that the COVID-19 pandemic exposed vulnerabilities in global supply chains, emphasizing the need for diversification.
To mitigate risks and ensure a stable supply of semiconductors, India needs to continue its efforts to develop a domestic manufacturing ecosystem, attract foreign investment, and diversify its sources of imports. Enterprise buyers must also play a role in co-creating India's chip supply chain to secure their AI future and reduce reliance on East Asia-centric supply chains. India's semiconductor market is projected to grow from $38 billion in 2023 to over $100 billion by 2030, presenting a significant opportunity for investors and manufacturers.
