India's New Industrial Revolution Takes Shape Across Space, Chips, Data Centres And Solar

India is entering a new phase of industrialisation as rising domestic demand and government support draw private capital into emerging sectors including space, semiconductors, data centres, electronics and solar manufacturing, brokerage Jefferies said in a report.

The government has backed the push through measures including opening the space sector to private companies, tax incentives for data centres, large production-linked schemes for semiconductors, electronics and solar, localisation requirements and purchases of GPUs.

The resulting investment cycle is creating opportunities not only in end-product manufacturing but also across domestic supply chains, components, infrastructure and engineering services, it said.

On the space sector, Jefferies said India is among a handful of spacefaring nations with globally competitive capabilities. The government opened the sector to private participation in 2020 and is targeting an almost five-fold expansion of the space economy between 2023 and 2030, to about $40 billion-$45 billion.

Indian startups are increasingly moving from early-stage innovation toward commercial execution. Skyroot is targeting an orbital launch in July, while Pixxel is developing high-resolution earth-observation satellites. Agnikul is working on 3D-printed rocket engines and Digantara is developing satellite-based space-surveillance capabilities.

The shift is broadening private-sector participation beyond satellite services into launch vehicles, propulsion, earth observation and space situational awareness.

The brokerage said India's semiconductor ambitions are moving from policy planning toward execution, with about $20 billion of investments announced or underway, including a chip fabrication plant under construction and several outsourced semiconductor assembly and test (OSAT) projects moving toward production.

A new incentive plan worth about $13 billion is expected to further expand the ecosystem and increase domestic value addition, including in chip design.

Supply-chain depth, availability of skilled talent and competition from established semiconductor hubs remain challenges. But the investment pipeline is laying the foundations for a domestic semiconductor manufacturing ecosystem.

On the data-centre industry, it said India has emerged as a strategic digital-infrastructure segment, with co-location capacity rising five-fold over the past five years to about 2 gigawatts.

Cloud adoption, digitisation and data-localisation requirements are driving demand. Capacity could expand another five-fold to about 10 GW over the next five years, supported by favourable cost economics, policy measures and rising demand from hyperscalers.

That expansion could represent about $9 billion in revenue for data-centre operators and roughly $45 billion of investment across power, cooling, construction and network infrastructure, according to the report.

Jefferies said India's electronics industry is entering a new phase, with policymakers and manufacturers focusing increasingly on domestic value addition and component production.

Electronics exports have risen sharply, while schemes including the Electronics Components Manufacturing Scheme (ECMS) and Mobile 2.0 are intended to deepen backward integration and reduce dependence on imports.

The report forecasts that ECMS could cover about 50% of the bill of materials for mobile components over the next six years, compared with less than 20% currently.

Printed circuit boards, including high-density interconnect and multi-layer boards, are a particular focus. The segment has an estimated $5 billion total addressable market, with 85-90% of demand currently met through imports.

The brokerage said India has emerged as the world's second-largest solar photovoltaic manufacturer, with about 35 GW of solar-cell capacity operational and another 100 GW under construction.

Policy measures including the Approved List of Models and Manufacturers (ALMM), domestic-content requirements and production-linked incentives are encouraging greater integration across the solar manufacturing chain, including cells, wafers and ingots.

The report expects about 90% of the solar manufacturing value chain to be localised by 2030.

India is also positioned to benefit from a global supply-demand imbalance in aerospace, leveraging relatively competitive manufacturing costs and its engineering talent pool, it said, adding that Boeing and Airbus already source an estimated $1.4-1.6 billion annually from India, while domestic companies including Aequs, Azad, BHFC, DYTC, RW, MOTHERSO and SANSERA are supplying global original-equipment manufacturers and Tier-1 suppliers and expanding their aerospace businesses.

The opportunity extends beyond outsourcing into higher-value manufacturing and engineering as global aerospace companies diversify supply chains.

The common thread across these industries is a push to move India higher up global supply chains. Government incentives are being combined with a large domestic market, rising digitisation, strategic localisation and growing demand for manufacturing and infrastructure.

Space and semiconductors are relatively new areas of private-sector participation, while electronics and solar are moving from import dependence and assembly toward greater domestic value addition. Data centres are emerging as a major infrastructure build-out, and aerospace offers an avenue for Indian manufacturers to capture a larger share of global production.

Together, these sectors point to a broader industrial strategy: use India's domestic demand and policy support to build local capabilities, attract private investment and position Indian companies deeper inside global technology and manufacturing supply chains.