India Must Back Chip Design With $1Bn Incentives, Says L&T Semiconductor Chief

With India’s semiconductor consumption projected to touch $100 billion by 2030, Sandeep Kumar, CEO of L&T Semiconductor Technologies, said nearly $50–60 billion of this demand will come from CPUs, GPUs, NPUs, AI accelerators and related products, each requiring $200–400 million to design.

“If as a nation we are prepared to invest $10–20 billion in manufacturing, we must also be ready to allocate $500 million to $1 billion across multiple companies for developing compute chips,” he said.

He further pointed out that while India’s semiconductor consumption is projected to reach $100 billion by 2030, nearly $90 billion of it will be absorbed by products designed outside the country; whether it’s an Apple iPhone or an NVIDIA server.

To make India a true product nation, it cannot be the effort of a single company, it will require an entire ecosystem of thousands of startups working in this direction.

“Over a 10-year period, if each startup develops even 10 products, we will begin to achieve the right scale. Of course, not every startup will succeed, some will fail, that’s the nature of the business; but that’s the scale India needs to truly become a product nation,” he added.

L&T CEO also emphasised on making best performance products that will be able to give India an edge in terms of cost as well.

“The good news is that once you design a chip with the best performance and cost, it is globally competitive. There’s no reason it can only serve the Indian market. In fact, given how aggressive Indian pricing already is, a chip designed here could capture global market share, especially outside China,” he said.

Breaking down the numbers, Kumar explained that in a $100 billion market with roughly 50% gross margins, nearly $50 billion is reinvested into R&D globally, while only about 10% translates into net profit, the rest fuels continuous innovation. “For “India to catch up, we must be prepared to invest $30–40 billion annually over the next two to three years, until our own products start rolling out,” he concluded.

Larsen & Toubro is fast emerging as a major player in the semiconductor space through its subsidiary, L&T Semiconductor Technologies (LTSCT), launched in 2023 with a capital outlay of ₹830 crore (US$100 million) for fabless chip design.