Over 80% of $3 trillion AI investment still to come, six sectors offer India manufacturing opportunity: Avendus

India’s new-age manufacturers could gain from a global artificial intelligence infrastructure investment cycle estimated at $3 trillion, with more than 80% of the spending still to be deployed, according to a report by Avendus Capital.

The investment bank has identified six industrial sectors — defence and aerospace, space technology, robotics and automation, semiconductors, energy transition and advanced materials — where India could reduce import dependence and build globally competitive manufacturing capabilities.

The report identifies 2027–28 as a crucial window for commercialisation, as manufacturing capacity moves beyond policy support and project approvals towards production. Demand for AI infrastructure, energy systems and greater geopolitical security is expected to shape the opportunity.

Semiconductor demand to more than double

India’s semiconductor consumption is projected to rise from $49.5 billion in 2025 to $106.5 billion by 2030, more than doubling in five years. The expanding market could create opportunities in chip design, packaging, testing and specialised materials, allowing Indian companies to participate in a wider section of the global semiconductor value chain.

The country’s space economy is targeted to grow more than threefold, from around $13 billion in 2025 to $44 billion by 2033. Domestic defence production is projected to reach around $31.6 billion by 2030. India’s robotics market is estimated to expand nearly fourfold to $4.6 billion by 2030, supported by rising domestic adoption and import substitution.

Koushik Bhattacharyya, Managing Director and Head of Industrials Investment Banking at Avendus Capital, said the opportunity was substantial, but India’s competitive advantage would emerge in selected segments.

“With more than 80% of the USD 3 tn AI-infrastructure investment yet to be deployed globally, the India opportunity is driven by a trifecta of factors: a large sovereign and domestic demand base, deep engineering talent and robust policy framework,” he said. “We have identified six sectors driving this wave, and 2027–28 will put to test India’s hard-tech ambitions as these sectors move towards commercialization.”

Clean energy and advanced materials in focus

Avendus expects India’s clean-energy manufacturing capabilities to move further upstream over the next five years. By the end of the decade, India could be among a small group of countries outside China with an integrated solar manufacturing chain spanning ingots to modules.

The report also points to several gigawatt-hour-scale battery-cell plants, commercial production of indigenous electrolyser stacks and rare-earth-free motor technology.

Advanced materials resemble India’s electronics manufacturing industry a decade ago, given rising domestic demand, heavy import dependence and the first wave of local capacity creation. Recycling is expected to scale up first, followed by battery materials. Rare-earth magnet manufacturing could advance with policy support, while defence and aerospace demand may create opportunities for specialty materials. as per the report.