Given the focus of the Indian government to increase and deepen India’s semiconductor capabilities and the scope of growth in the sector, it appears the semiconductor opportunity is real for investors.
Recently, on 15 July, Union IT Minister Ashwini Vaishnaw informed that the Union Cabinet had approved ₹1.27 lakh crore for the second edition of India Semiconductor Mission (ISM 2.0). As per experts, ISM 2.0 can strengthen India’s position in the global semiconductor arena as a competitive and reliable participant.
In her Union Budget 2026–27 speech on 1 February, Finance Minister Nirmala Sitharaman announced the launch of India Semiconductor Mission 2.0, with a focus on producing semiconductor equipment and materials in India, designing full-stack Indian semiconductor intellectual property, and fortifying both domestic and global supply chains.
The Indian semiconductor industry is growing rapidly. As per industry estimates, the size of the Indian semiconductor market, which was about $45-$50 billion in 2024-2025, is expected to reach $100-$110 billion by 2030.
Semiconductors are critical not only for computers, mobile phones, and artificial intelligence but also for modern electronics, telecommunications, automobiles, and even for defence systems.
A long-term opportunity?
Experts are constructive on the semiconductor theme over the long term. However, they caution that investors should not view it as a quick-return opportunity like the defence sector, which continues to enjoy strong policy tailwinds from the government.
“India’s semiconductor opportunity is real, but it is not yet comparable with defence as a listed market theme. Defence entered its growth cycle with established manufacturing capabilities, visible government orders and proven earnings. Semiconductors require far greater technological depth, specialised talent, large capital commitments and years of execution before policy support translates into sustainable profitability,” said Harshal Dasani, Business Head at INVAsset PMS.
Dasani underscored that while the government’s commitment under ISM 2.0 strengthens the long-term ecosystem by broadening the focus beyond fabrication into chip design, advanced packaging, equipment, materials and research, it is still an investment cycle rather than an earnings cycle.
As per Dasani, the more immediate opportunity may lie around the semiconductor ecosystem rather than inside the most advanced chip manufacturers.
“Electronic manufacturing services, data centres and domestic chip design may see commercial benefits earlier as capacity builds out. Execution will remain the key differentiator. In capital-intensive industries, policy can create demand, but only companies that deliver technology, scale and capital discipline generate durable shareholder value,” Dasani explained.
Ravi Singh, Chief Research Officer at Master Capital Services, has a similar view.
“This is not a sector that will deliver overnight success, but it does have the potential to become a strategic industry, much like defence has over the past few years,” said Singh.
Singh underscored that investors need to keep their expectations realistic.
“Building a semiconductor industry requires massive capital, skilled talent, reliable infrastructure and strong global partnerships. It will take years before most companies begin reporting meaningful profits from this opportunity,” Singh explained.
How should Indian investors play the theme?
At the current juncture, India offers an emerging manufacturing and infrastructure story backed by policy support, which will take time to mature.
On the other hand, global markets continue to offer direct exposure to AI companies that are leading the race with established technology, global customers and strong cash generation.
As per Dasani, Indian investors should view global AI leaders as the core exposure to the AI theme, while selectively building exposure to India’s semiconductor ecosystem as it develops.
However, some experts say that for long-term investors, the AI story should no longer be viewed only through the lens of US technology giants.
“India is gradually creating its own investment opportunities. Companies involved in electronics manufacturing, chip design services, industrial automation, data centres and specialised engineering are likely to be among the early beneficiaries as the ecosystem expands,” said Singh.
“Investors should focus on businesses that can benefit from this transformation. The real opportunity lies in participating in the ecosystem that is being built today, rather than expecting immediate returns from semiconductor manufacturing itself. If the government’s policy support remains consistent, this could become one of India’s most important long-term investment themes over the next decade,” said Singh.
Harsh Thakkar, an equity research analyst at SAMCO Securities, pointed out that a share price is earnings times the PE multiple. In India’s chip theme, there are almost no earnings yet.
Thakkar added that there is also very little to actually buy. The few listed names with real chip exposure earn only a small part of their revenue from chips, but trade as if chips are the whole business.
Thakkar suggests keeping the AI money global, where the profits already exist.
“Keep India’s semiconductors small and increase gradually when chip revenue starts showing up in a quarterly result,” said Thakkar.
Read all market-related news here
Read more stories by Nishant Kumar
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
