India's semiconductor market grew by 28.3 per cent in 2010, according to India Semiconductor Association (ISA), the trade body representing Indian Electronic System Design and Manufacturing (ESDM) industry.

According to ISA- Frost & Sullivan India Semiconductor Market update 2010-2012, released today, the total semiconductor market (TM) in India is estimated at USD 6.55 billion in 2010 and is expected to be USD 9.86 billion in 2011. This is estimated to grow at a CAGR of 22.7 per cent from 2010 to 2012.

This growth showed that global semiconductor market's cyclical trends have minimal impact on India, ISA said.

Mobile Devices, Telecommunications, Information Technology and Office Automation (IT & OA) are the key drivers of the semiconductor market in India contributing around 82 per cent to Semiconductor TM in 2010.

"Local manufacturing of telecom equipment by OEMs and EMS companies propel related semiconductor consumption by 50 per cent during 2010 to 2012", it said.

"The semiconductor industry in India presents immense potential to contribute significantly to the country?s growing economy. In addition, there are strategic reasons for a country of our size and GDP to develop domestic electronics manufacturing ecosystem.

"We need local manufacturing to reduce the import bill of electronic components and are quite optimistic about the government?s efforts to encourage local manufacturers," ISA Chairman Pradip K Dutta said.

Meanwhile Ajay Kumar, joint secretary, Department of Information Technology said in New Delhi, while releasing the report, "Government is trying to give preferential access for domestically manufactured products".

"TRAI has also come up with recommendations to promote telecom equipment manufacturing in the country which is going to provide strong base to Government's effort to promote local manufacturing," he said.

Recently cabinet also approved setting up high powered committee to set-up two semiconductor wafer fabrication plant in the country with investment of Rs 25,000 crore (USD 5 billion approximately).

Semiconductor wafer fabrication plants are used for manufacturing electronic chips used in electronic devices which act like heart of a device.