Data Centres, Space and Semiconductors Emerge as India’s Next Industrial Growth Engines

India’s next industrial expansion could take shape well beyond its traditional manufacturing base. Data centres, space technology, semiconductors, electronics, solar manufacturing and aerospace are emerging as six areas that could draw sizeable investment through the rest of the decade, according to Jefferies. 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The shift is being supported by a mix of government incentives, localisation requirements, tax benefits and the opening of sectors that were previously restricted. At the same time, India’s large domestic market is giving private companies more reason to build capacity locally. 

Among these emerging industries, data centres stand out for the scale of investment that could be required over the next five years. 

Data Centre Capacity Could Reach 10 GW 

India’s colocation data-centre capacity has already expanded fivefold over the past five years to around 2 gigawatts (GW). 

Jefferies expects another fivefold increase over the next five years, taking capacity to roughly 10 GW. 

Getting there could require around $45 billion in facility capital expenditure. For data-centre operators themselves, Jefferies estimates the expansion could create a revenue opportunity of approximately $9 billion. 

The investment would stretch well beyond companies operating the facilities. Construction firms, real-estate developers, power-equipment manufacturers, cooling-solution providers and network-infrastructure companies could also see opportunities as new capacity is built. 

India’s Space Economy Targeted at $40-45 Billion by 2030 

Space is another industry moving from an early-stage opportunity towards commercial activity. 

India’s space economy is targeted to grow about fivefold from its 2023 level to between $40 billion and $45 billion by 2030. 

Private participation has increased since the sector was opened up in 2020. Companies such as Skyroot Aerospace, Pixxel, Agnikul Cosmos and Digantara are among the players highlighted in the report as the industry moves towards commercial execution. 

Semiconductor Investments Reach Around $20 Billion 

India’s semiconductor plans are also beginning to move from policy announcements towards projects on the ground. 

Around $20 billion of investment is already underway. This includes a chip fabrication plant under construction as well as several outsourced semiconductor assembly and test, or OSAT, projects moving into production. 

Another incentive programme of around $13 billion could broaden the ecosystem further. 

The opportunity, however, comes with challenges. Supply-chain depth, availability of talent and competition from established semiconductor markets remain areas to watch as India builds out the industry. 

Electronics Push Moves Beyond Assembly 

India’s electronics manufacturing story is also beginning to shift from assembling finished products towards producing more of the components that go into them. 

Jefferies expects domestic value addition to rise from less than 20% currently to around 50% of the mobile component bill of materials over the next six years. 

Printed circuit boards are another area with room for local manufacturing to expand. The market is estimated at around $5 billion and remains largely dependent on imports. 

The move towards greater component manufacturing could therefore become an important part of the next phase of India’s electronics industry. 

Solar Manufacturing Builds Local Supply Chain 

Solar manufacturing has already scaled considerably. 

India is now the world’s second-largest solar photovoltaic manufacturer, with around 35 GW of solar-cell manufacturing capacity operational. Another roughly 100 GW is under construction. 

By 2030, Jefferies expects around 90% of the solar manufacturing value chain to be localised. 

Production incentives and domestic-content requirements are among the measures supporting that expansion. 

Aerospace Suppliers Find a Bigger Global Opportunity 

Aerospace completes the group of six industries identified in the report. 

Boeing and Airbus currently source around $1.4-1.6 billion worth of products annually from India. Global supply-chain constraints could create further opportunities for Indian manufacturers to increase their presence in the sector. 

Aequs, Azad Engineering, Bharat Forge, Dynamatic Technologies, Motherson and Sansera are among the Indian companies that have emerged as suppliers to global aerospace manufacturers and Tier-1 companies. 

Taken together, the six sectors show how India’s industrial expansion is beginning to spread into newer areas. The numbers involved vary considerably from a potential 10 GW data-centre market to a space economy targeted at as much as $45 billion by 2030 but the common thread is a push towards deeper domestic manufacturing, private investment and greater participation in global supply chains.