india bets on chips: navy sees semiconductor policy as 'new oil' for defense

2025-02-24 general

Mumbai, Monday, 24 February 2025.
admiral dinesh k tripathi, india’s navy chief, champions the nation’s semiconductor policy. he believes it will revolutionize domestic defense manufacturing. tripathi calls the policy ‘new oil’ for the economy. the ministry of defence is backing innovation with ₹4.5 billion allocated this year. this investment aims to boost the ‘innovation for defence excellence’ scheme. since 2018, the scheme has already fostered nearly 400 contracts, marking a significant push towards self-reliance and technological advancement in india’s defense sector. this initiative signals a shift towards collaboration, transforming the navy’s role from customer to partner with the defense industry.

semiconductor policy as a catalyst

Admiral Tripathi’s endorsement highlights the policy’s potential to attract investment and stimulate growth in the semiconductor industry [1][2][5]. The Ministry of Defence’s commitment, earmarking 75% of its modernization budget—nearly ₹1 trillion—for the domestic defense industry, with 25% specifically for the private sector, signals a strong financial impetus [2]. This commitment aims to reduce reliance on foreign suppliers and bolster domestic manufacturing capabilities. Such initiatives can significantly enhance the valuation of Indian defense and technology companies involved in semiconductor manufacturing and related activities.

semicon india and global collaboration

The upcoming SEMICON India event scheduled for September 17-19, 2025, in Bangalore, is poised to be a pivotal event for the semiconductor industry [3]. Organized in collaboration with SEMI, the event aims to unite industry stakeholders and facilitate partnerships [3]. Bhupinder Singh, CEO of Messe München India, notes India’s semiconductor demand is currently valued at $24 billion and could reach $110 billion by 2030 [3]. This growth potential makes India an attractive destination for global semiconductor companies, potentially driving investment and increasing the value of related stocks.

dixon technologies and electronics manufacturing

India’s electronics manufacturing sector is experiencing rapid growth, with Dixon Technologies emerging as a key player [4]. Dixon’s fiscal year 2024 revenue reached ₹177.13 billion (approximately $2.04 billion), marking a 45% year-over-year increase [4]. This growth reflects the broader trend of multinational corporations shifting their supply chains from China to India, driven by factors such as trade tensions and government incentives [4]. Dixon’s involvement in assembling smartphones for brands like Google, Xiaomi, and Oppo positions it favorably to capitalize on this trend [4].

challenges and opportunities in india’s supply chain

Despite the optimistic outlook, challenges remain in establishing a comprehensive domestic electronics supply chain [4]. These include infrastructure gaps, technological limitations, and uncertainties in the international trade environment [4]. Potential tariffs and geopolitical tensions could impact India’s export competitiveness. Japan’s concerns over China’s export controls on critical materials like gallium and germanium underscore the vulnerability of global supply chains [8]. Securing alternative supply sources and enhancing domestic capabilities are crucial for sustained growth and investor confidence.

Bronnen

semiconductor policy defense manufacturing