The automotive industry in India is driving major growth in India’s semiconductor consumption, which is expected to exceed USD 110 billion by 2030, according to the India Electronics and Semiconductor Association (IESA).
The India Brand Equity Foundation (IBEF) estimates that the automotive industry is expected to invest up to Rs. 58,000 crore (USD 7 billion) by 2028 in local manufacturing of critical components such as EV-powered electronics and intelligent systems to reduce imports and leverage the China Plus One trend.
Furthermore, by 2026, IBEF projects India’s auto component exports to reach USD 80 billion, up from USD 21.2 billion in 2024, reflecting the country’s role as a global manufacturing hub. All of this underscores the rapid growth of EV sales in India. IBEF data also shows that as of January 2025, EV sales in the country reached 1.69 million units, showing a 19.4% month-on-month and 17.1% year-on-year increase.
India’s Semiconductor Challenge
The challenge, however, is the rising cost of semiconductor chips in vehicles which is expected to double from USD 600 to USD 1,200 per vehicle by 2030, according to a NITI Aayog report.
The price hike is attributed to the growing adoption of advanced automotive technologies like electric powertrains, adoption of Advanced Driver Assistance Systems (ADAS), increased vehicle connectivity, and growing popularity of autonomous driving features.
Rising chip costs will, of course, strain the profit margins of OEMs and may even delay production and adoption of high-tech vehicles. As vehicles become more connected and intelligent, semiconductors are becoming more valuable. The NITI Aayog report highlights how important it is for India to grow its domestic semiconductor manufacturing capabilities to reduce dependence on imports and manage rising costs in the automotive landscape.
In addition, India’s current reliance on imported semiconductor materials and components leaves the automotive and electronics sector vulnerable to disruptions in the global supply chain and various geopolitical uncertainties.
Though the government is doing what it can to reduce reliance on imports and position India as a global electronics exporter, building a robust domestic ecosystem remains a work in progress. High tariffs on raw materials and limited manufacturing capacity are significant hurdles. There’s also a lack of access to specialised materials that are critical to manufacturing advanced chips. Without these high-precision, heat-resistant materials that are suitable for miniaturisation, local chip manufacturers are limited in their capabilities to compete in producing cutting-edge semiconductors.
As chips become more complex and demand grows, there is a need for such advanced materials. As cost per chip continues to rise, OEMs will require materials that improve the lifespan and reliability of their products to justify their investments. However, the push for domestic semiconductor production to control rising costs offers major opportunities. For fabricators and OEMs in India, this is the time to take the lead in fostering collaboration with global components suppliers to access materials that meet global performance standards, while supporting “Make in India” targets.
Solving the Semiconductor Challenge in India
Addressing India’s challenge of securing access to critical advanced materials is central to building a resilient semiconductor ecosystem. For automotive semiconductor applications, ensuring a stable supply of critical materials — including precious metals — is just as important as achieving high reliability. Core inputs such as bonding wires, conductive pastes, and lead frames underpin the development of compact, heat-resistant, and reliable chips — the very foundation for technologies powering EVs, ADAS, and connected vehicles.
For India, the next step is ensuring that these materials are not only available locally but also engineered to withstand diverse climate conditions and demanding performance standards. Achieving this will require collaboration across the value chain — from semiconductor manufacturers and fabricators to EV OEMs and suppliers — to strengthen local capabilities in a sustainable and cost-efficient way. High-quality materials will be key to reducing failures and rework, while positioning India to meet, and eventually set, global benchmarks.
Powering India’s Automotive Future
The success of India’s automotive future is in the hands of local semiconductor fabricators, manufacturers, and suppliers who partner with organisations that can deliver advanced materials and process expertise to help them compete on a global scale.
Collaborations such as these are vital for building India’s local capabilities and reducing the country’s dependence on imports. At the same time, it powers India’s ambitions to become a net exporter of high-tech, automotive-grade electronics — putting the nation on the map as a global leader in manufacturing.
Yutaka Ito is Managing Director of TANAKA Kikinzoku India Private Limited. Views expressed are the author’s personal.