Domestic demand, labour supply give India structural advantage in semiconductor push: Bain & Co

New Delhi: India's dual advantage of unmatched domestic consumer demand and an expanding demographic dividend give the country a unique edge in the global semiconductor race, but securing access to core technology remains a critical hurdle that needs to be bridged, a top executive at global management consultancy firm Bain & Company said.

Balaji Thirumalai, Partner and India Head of Semiconductors and Electronics Manufacturing Practice at Bain & Company, said the central government's strategy under the Semicon 2.0 programme-spanning six pillars of talent, fabs, OSATs (outsourced semiconductor assembly and test), design, equipment, and materials-is the necessary approach to establish a complete ecosystem.

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"We need design as much as we need fabs. We need materials, and we need equipment to come into India. Because if you look at Taiwan, if you look at Korea, it's not just that the fabs have come up, the ecosystem has moved in. If you look at what's happening in the US when they're building fabs, the ecosystem is moving in," he said, referring to global majors such as Lam Research and Merck showing interest in India.

Highlighting India's distinct advantages over other emerging markets in Southeast Asia, Thirumalai pointed to captive domestic consumption driven by digitisation, combined with an available workforce for manufacturing operations.

"India offers a ready-made demand nation, not just a nation where we say we are offering subsidies, come build here. If you're building here, you can also serve the Indian market, in addition to building for the world. No other country that you compare India to offers that kind of a native in-built demand," he said on the sidelines of SEMICON India 2026.

He noted that the same upwardly mobile population driving demand also supplies the required workforce.

"You're looking at labour-intensive industries where you need support right from the assembly technician level-who's going to build the fabs, who's going to run the fabs, or any of the manufacturing plant operations... The demographic dividend that India has, gives us the advantage both from a demand standpoint and a supply standpoint for the labour," he said.

Addressing concerns over the availability of factory-floor technicians and cleanroom personnel, Thirumalai stated that the talent pipeline is being built alongside infrastructure.

"It takes 3-4 years to build a fab. By the time the fab comes up, whoever is building the fab and the government are putting together a plan to essentially say that this is the number of technicians that we need, so let's get them trained. We're getting them trained in Taiwan; we're getting them trained in India," he said, drawing an analogy to the scale-up of Apple iPhone manufacturing in the country.

Beyond capital and labour, Thirumalai identified "access to technology" as the key structural gap requiring resolution.

"For us to build a fab or an OSAT or even bring in some material or chemicals for requires someone who has done that before to come and teach us how to do it, or partner with us," he said, describing this as a call for action for multinational OEMs to partner with Indian firms and share technology and know-how.

On India's long-term standing in the global supply chain, Thirumalai cautioned that building scale requires time, noting that it took Taiwan and South Korea 35 to 40 years, and Japan 50 years, to build their industries.

All the macro conditions and tailwinds are in favour of India, he said, adding that India's policy focus should target areas such as advanced packaging and compound semiconductors, while working to evolve into a "product nation" that builds its own domestic brands over the next decade.