KPMG: Semiconductors and AI Are Turning India into a Global Economic Pivot

India is steadily repositioning itself as a key force in the global economy, powered by large investments in semiconductor manufacturing and the fast-growing adoption of artificial intelligence (AI), according to a new KPMG report released at the World Economic Forum 2026.

Titled Shift from Emerging to Pivotal: India in the New Geoeconomic Order, the report highlights a clear change in India’s growth story — from being a high-growth emerging market to a country actively shaping global trade flows, technology development, and sustainability agendas. KPMG noted that India’s progress is now being driven by execution, with policy initiatives translating into real capacity creation across advanced manufacturing, digital infrastructure, clean energy and AI.

Semiconductors form a core pillar of this transition. India has approved six semiconductor fabrication plants with a combined investment of around $1.3 billion, marking a shift from long-term intent to near-term action. Alongside this, the government has allocated $2.2 billion for deep-tech research and development, strengthening India’s standing among the world’s top five nations in critical technologies.

National initiatives such as the India Semiconductor Mission and Semicon India are expanding domestic chip-making capabilities across wafer fabrication, testing and validation, and advanced packaging. India is also drawing on its domestic availability of chemicals, minerals and industrial gases to reinforce upstream inputs, with the aim of building a more integrated and resilient semiconductor value chain. Investments in R&D and skill development, backed by partnerships with global players, are expected to create a sustainable ecosystem spanning chip design to manufacturing. KPMG projects that these efforts could place India among the world’s top five semiconductor hubs by 2030.

AI is emerging as the second major growth driver. KPMG estimates that AI adoption in India could unlock $1.7 trillion in economic value by 2035, with use cases expanding across healthcare, agriculture, education, manufacturing and defence. Under the IndiaAI Mission, more than 38,000 GPUs have already been deployed to support research institutions, startups and large-scale AI applications.

India’s technology and AI ecosystem now employs over six million people, while nearly nine out of ten startups founded in 2024 integrated AI into their products or services. The report also points to the government’s emphasis on scaling AI responsibly, supported by data governance frameworks and the creation of the IndiaAI Safety Institute.

Beyond technology, the report highlights broader structural momentum. Production-linked incentive schemes have attracted $22.2 billion in investments across 14 sectors, generating over $200 billion in incremental output and more than one million jobs. On the sustainability front, India achieved a 50% non-fossil share in installed power capacity by mid-2025, well ahead of its initial target. At the same time, new trade agreements with countries such as the UK, Oman and New Zealand are expanding India’s global economic footprint.

According to KPMG, India’s push in semiconductors and AI is helping anchor more resilient global supply chains while signalling a shift toward a more distributed model of technology leadership, positioning the country as a key collaborator in the evolving geoeconomic order.