The year 2025-26 could well be remembered as a watershed moment for India's battery and semiconductor industries. Long viewed as strategic vulnerabilities due to heavy import dependence, both sectors are now at the center of India's manufacturing and technology ambitions. A combination of geopolitical shifts, growing domestic demand, government incentives, and unprecedented capital investments is driving the emergence of a domestic ecosystem that could fundamentally reshape India's position in global supply chains.

For decades, India has been one of the world's largest consumers of semiconductors and advanced batteries but has remained heavily reliant on imports for critical components. This dependence became particularly evident during the global semiconductor shortage that disrupted industries worldwide and highlighted the strategic importance of chip manufacturing. Similarly, the rapid adoption of electric vehicles and renewable energy systems exposed India's dependence on imported battery cells and critical raw materials.

Today, the narrative is changing. Through aggressive policy interventions, large-scale incentive programs, and industry participation from both domestic conglomerates and global technology leaders, India is attempting to build a comprehensive ecosystem spanning semiconductor fabrication, chip packaging, battery cell manufacturing, energy storage systems, battery recycling, and advanced materials.

Strategic industries for the future

Semiconductors and batteries are no longer viewed merely as industrial products. They have become strategic assets that determine a nation's competitiveness in sectors ranging from artificial intelligence and telecommunications to defense, automotive manufacturing, renewable energy, and consumer electronics.

India's semiconductor market is expected to reach nearly US$50 billion by the end of 2025 and is projected to exceed US$100 billion by 2030. The country currently imports the vast majority of its semiconductor requirements despite being one of the world's largest markets for smartphones, consumer electronics, automobiles, and industrial equipment.

At the same time, battery demand is rising exponentially. Electric vehicles, renewable energy integration, grid-scale energy storage, data centers, and consumer electronics are collectively creating a demand environment unlike anything witnessed before. Industry estimates suggest that India's battery demand could exceed 260 GWh by 2030, making it one of the fastest-growing battery markets globally.

The convergence of these demand drivers has convinced policymakers that domestic manufacturing capacity is not simply desirable but essential.

Apart from that, the global geopolitical developments have significantly improved India's attractiveness as a manufacturing destination.

The China+1 strategy adopted by multinational corporations continues to reshape global supply chains. Companies are actively seeking alternative manufacturing locations to reduce concentration risks and improve resilience.

India's large domestic market, skilled workforce, improving infrastructure, and supportive policy environment make it a compelling destination for investment. Semiconductors and batteries are among the sectors benefiting most from this trend.

International companies increasingly view India not only as a market but also as a strategic manufacturing base serving global demand. The combination of domestic consumption and export opportunities creates a unique growth proposition that few countries can match.

Historic wave of semiconductor investments

Perhaps the most visible outcome of these policy measures has been the emergence of India's largest-ever semiconductor investment cycle.

The flagship project is Tata Electronics' semiconductor fabrication facility at Dholera in Gujarat. Developed in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corporation (PSMC), the project represents an investment of approximately Rs. 91,000 crore and is widely regarded as India's first major commercial semiconductor fabrication plant.

The facility will manufacture mature-node semiconductors used in automotive electronics, industrial applications, communications systems, and consumer devices. While India has long been known for semiconductor design talent, the Dholera project marks the country's entry into large-scale chip manufacturing.

The significance of this investment extends beyond production capacity. It establishes a foundation for future semiconductor investments and demonstrates India's ability to attract complex manufacturing projects requiring advanced technology, skilled talent, and long-term capital commitments.

Equally important is Micron Technology's semiconductor assembly, testing, marking, and packaging (ATMP) facility at Sanand, Gujarat. With an investment of approximately US$2.75 billion, the project is expected to play a crucial role in integrating India into the global semiconductor supply chain.

Assembly and packaging have become increasingly important components of semiconductor manufacturing as chip architectures grow more complex. Advanced packaging technologies are now central to performance improvements in artificial intelligence, high-performance computing, and advanced electronics.

India's strategy of simultaneously developing fabrication and packaging capabilities reflects a pragmatic understanding of global semiconductor market dynamics.

Additional momentum has come from companies such as Kaynes Semicon, which has launched semiconductor packaging and testing operations with investments exceeding Rs. 3,300 crore. Multiple approved projects across Gujarat, Assam, and other states have further expanded the semiconductor investment pipeline.

Collectively, approved semiconductor projects now represent investments exceeding Rs. 1.6 lakh crore, making semiconductors one of India's fastest-growing manufacturing sectors.

Battery manufacturing gains momentum

The battery sector is witnessing a similarly significant transformation. Electric mobility remains the primary growth catalyst. India has become one of the world's largest markets for electric two-wheelers, while adoption is steadily increasing across passenger vehicles, commercial fleets, buses, and three-wheelers.

As vehicle electrification accelerates, battery manufacturing has emerged as a strategic priority. Major companies including Reliance New Energy, Ola Electric, Amara Raja Energy & Mobility, Exide Industries, Rajesh Exports, and others have announced large-scale investments in battery manufacturing facilities.

Reliance has articulated ambitious plans to establish a fully integrated energy storage ecosystem encompassing battery manufacturing, materials processing, and energy storage solutions. Amara Raja is investing heavily in lithium-ion cell manufacturing and battery technology development. Exide Industries has partnered with international technology providers to strengthen its position in advanced battery manufacturing. Ola Electric continues to expand its battery manufacturing ambitions as part of its broader electric mobility strategy. Together, these investments are laying the groundwork for domestic production capacities that could eventually reduce India's dependence on imported battery cells.

Building an entire ecosystem

One of the most encouraging developments is the industry's focus on ecosystem creation rather than isolated manufacturing projects. Semiconductor manufacturing requires a sophisticated network of suppliers, equipment manufacturers, specialty chemicals producers, wafer suppliers, testing laboratories, logistics providers, and research institutions. Similarly, battery manufacturing depends on cathode materials, anode materials, electrolytes, separators, recycling infrastructure, and raw material security.

Recognizing this reality, policymakers and industry leaders are increasingly focusing on supply-chain localization. New investments are being directed toward specialty chemicals, battery materials, semiconductor-grade gases, electronic chemicals, and advanced manufacturing equipment. The objective is to ensure that India develops not only assembly capabilities but also meaningful domestic value addition. This ecosystem approach is expected to generate substantial employment opportunities across engineering, manufacturing, research, and technical services.

Technology trends

Artificial intelligence has emerged as the most important demand driver for semiconductors globally. AI workloads require increasingly powerful processors, memory solutions, and advanced packaging technologies. The AI boom has transformed the economics of semiconductor manufacturing, driving record revenues across the global industry and creating opportunities for new manufacturing hubs. India's growing capabilities in semiconductor design, combined with emerging manufacturing capacity, position the country to participate in this transformation.

Advanced packaging technologies are another major area of focus. Traditional semiconductor scaling is becoming increasingly expensive, making advanced packaging and chiplet architectures critical for future performance improvements. India's emphasis on ATMP and OSAT facilities aligns with these global trends and could allow the country to capture a meaningful share of high-growth semiconductor manufacturing activities.

In the battery sector, technological innovation is equally dynamic. Lithium Iron Phosphate (LFP) batteries continue to gain market share due to their cost advantages and safety characteristics. At the same time, companies are investing in next-generation technologies including solid-state batteries, sodium-ion batteries, silicon anodes, and advanced battery management systems.

Battery recycling has emerged as another strategic priority. As EV adoption accelerates, recycling will become increasingly important for recovering valuable materials such as lithium, nickel, cobalt, and manganese. Several Indian companies are now investing in battery recycling technologies to support a circular economy model and reduce future dependence on imported raw materials.

Policy support

The transformation of both sectors has been driven largely by proactive government intervention. The launch of the India Semiconductor Mission (ISM) marked the beginning of a new era for semiconductor manufacturing. Supported by a financial outlay of Rs. 76,000 crore, the mission was designed to attract investments across semiconductor fabrication, assembly, testing, packaging, design, and ecosystem development.

Recognizing the importance of creating a complete value chain, the government expanded its support through India Semiconductor Mission 2.0 during FY2025-26. The new phase focuses on strengthening semiconductor equipment manufacturing, developing indigenous intellectual property, supporting advanced materials production, and encouraging research and development.

Budget allocations for semiconductor initiatives have increased significantly, reflecting the government's long-term commitment to building a globally competitive chip manufacturing ecosystem. The emphasis is no longer limited to fabrication plants but extends to the broader semiconductor value chain, including chip design, packaging technologies, testing infrastructure, and equipment manufacturing.

The battery industry has received similar attention through the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cells (ACC). The program aims to establish 50 GWh of domestic battery manufacturing capacity while encouraging technology development and local value addition.

These initiatives are complemented by policies promoting electric vehicles, renewable energy deployment, battery storage systems, and electronics manufacturing, creating a robust demand ecosystem for domestically produced batteries and semiconductors.

Challenges remain

Despite the positive momentum, significant challenges remain. Semiconductor manufacturing is among the most capital-intensive industries in the world. Fabrication facilities require billions of dollars in investment, advanced technologies, reliable utilities, and highly skilled personnel.

The battery sector faces its own challenges, particularly regarding raw material security. India currently imports a significant proportion of the lithium, cobalt, nickel, and other critical minerals required for battery manufacturing. Securing reliable access to these resources will be crucial for sustaining industry growth. Execution risks also remain. Several battery projects have experienced delays, highlighting the complexity of establishing advanced manufacturing operations.

Technology evolution presents another challenge. Rapid changes in battery chemistry and semiconductor architectures require continuous investment in research and development.

Future outlook

The outlook for India's battery and semiconductor industries remains exceptionally strong. Both sectors are benefiting from powerful structural trends that are expected to persist for decades. Electrification, renewable energy adoption, artificial intelligence, digitalization, advanced manufacturing, and supply-chain diversification are creating sustained demand growth. Government support remains robust, industry participation is expanding, and investment commitments continue to increase.

By the end of this decade, India is expected to possess a substantially more diversified semiconductor ecosystem encompassing fabrication, packaging, testing, design, and materials manufacturing. The battery sector is similarly positioned for rapid expansion as electric vehicles and energy storage systems become mainstream.

The broader significance of these developments extends beyond individual industries. Batteries and semiconductors are foundational technologies that influence competitiveness across virtually every modern industrial sector. Success in these industries would strengthen India's manufacturing base, reduce import dependence, create high-value employment opportunities, stimulate research and development, and enhance technological self-reliance.

For a country aspiring to become a global manufacturing powerhouse and a leading digital economy, the emergence of robust battery and semiconductor ecosystems may ultimately prove to be among the most consequential industrial transformations of the decade.