India is the seventh largest country by geographical area, and the most populous country in the world.

The economy of India is the fourth largest in the world as measured by purchasing power parity(PPP). India is the second fastest growing major economy in the world.

	The Indian semiconductor design industry, comprised of VLSI design, board design and embedded software companies, has design companies clustered around Bangalore, Delhi/Noida, Hyderabad, Chennai, with presence also in Pune, Ahmedabad and Goa. All the global top ten fabless design companies have India operations and 17 of the top 25 semiconductor companies have a strong presence here
	These companies primarily address an international demand with increasing adaptation of design to address domestic requirements. India provides an advantage with a quick turnaround time that helps early market access, and a high quality workforce. India’s semiconductor industry employs the cream of engineering talent and generates IP in an environment that is conductive for IP rights.
	The Indian chip design industry is involved in end to end design activities ranging from chip architecture, development, design verification and layout, all the way to design tape out.
	The semiconductor design industry had a turnover of USD 3.2 billion in 2005 with an engineering workforce of around 75000. It is estimated to reach USD 43 billion by the year 2015. The industry will provide jobs to 780,000 professionals with a CAGR of around 30% for this period.
	The strong foundation that the design community has established is seen as a key factor for success as India moves toward a semiconductor manufacturing industry.

Having carved a niche in global software development and services outsourcing, India's search for the next big thing in high-tech could see it take on the rest of Asia in the crowded chip manufacturing market.

Semiconductor firms such as Intel Corp., Advanced Micro Devices Inc. and Freescale Semiconductor Inc. have already tapped India for chip design, but not manufacturing.

New government incentives to boost chip making, coupled with India's low labour costs and surging demand for electronic goods from a fast-growing middle class, could change that.

"India would be the only country in the world with robust models in chip design, chip manufacturing and electronics manufacturing," said Poornima Shenoy, president of lobby group India Semiconductor Association.

In March, Hindustan Semiconductor Manufacturing Corp., which is backed by a group of Indian investors based in Silicon Valley, announced plans to build two chip-making plants in India for up to $4.5 billion using technology from Germany's Infineon Technologies AG.

"Our focus is clearly the Indian market, although we plan to export out of the country as well. The growth in mobile phones and computers has enabled the demand for chips," said Deven Verma, chairman of Hindustan Semiconductor Manufacturing.

Mobile phone subscribers in India rose 68 percent in March from a year earlier to 166 million. Still, only about 15 percent of India's 1.1 billion people own a mobile phone, compared with around 35 percent in China.

"The global demand for chips will always go through a cycle of oversupply and shortages, but the potential in India is going to be huge in the years to come. Whether we make it or not, India will continue to buy chips," Verma said.

CONSUMPTION SURGE

India spent about $2.8 billion on semiconductors in 2005, and demand is estimated to exceed $36 billion by 2015, according to a study by the India Semiconductor Association and research and consultancy firm Frost & Sullivan.

Furthermore, the study says electronic equipment consumption should surge to $363 billion by 2015, more than 10 times spending of $28.2 billion in 2005.

"It is just an enabler that was badly required for the semiconductor industry to take off in India," Alok Ohrie, managing director of AMD India, said of the government push. "It will help establish semiconductor manufacturing in India."

AMD is a technology partner to the local SemIndia consortium, which has said it planned to set up a chip-making facility in India with an investment of $3 billion over the next five years.

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India's semiconductor design industry had revenues of $3.3 billion in 2005 and employed about 75,000 people. That is expected to increase to $43 billion in revenue and over 780,000 employees in 2015, the India Semiconductor Association said.

In February, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the world's top contract chip maker, opened an office in Bangalore to support its customers with design activities in India.

STMicroelectronics' Indian chief told Reuters in February that headcount in its Indian chip design centre would be raised to 3,000, from 1,700 now, in the next three years.

"If India can do the chip design work, it can take care of the manufacturing part as well, especially when labour costs in India are still 10-12 percent lower than China," said Y.S. Sashidhar, vice-president at Frost & Sullivan.