At the Semicon India 2026 conference in New Delhi this month, Pratik Parmar showed a circuit board from his startup Atomo. The board lets cameras and machines detect fires, count people or identify factory defects without continuously sending data to the cloud.

"You don't require the internet or cloud. What happens in your premises stays in your premises," said Parmar.

These are edge artificial intelligence chips: processors that run AI locally inside cameras, cars and other electronics, and that manufacturers can tailor to specific devices and tasks. Atomo's board currently runs on a US-designed Amlogic chip because Indian alternatives were not mature enough when the company selected a processor three years ago.

That is starting to change. A nascent Indian industry around specialised AI chips has emerged, and homegrown firms are now moving their first products into customer testing and commercialisation.

Under a government chip-design programme, 105 startups and small businesses have gained access to advanced design tools and have produced about 35 chip designs ready for manufacturing, according to India's electronics ministry.

India arrived late to the race to design chips for AI data centres, but industry executives say the country still has room to compete elsewhere.

"India does not have to build the world's fastest AI processor. Putting intelligence into cameras, vehicles and everyday electronics could be a more realistic opening," said Ashok Chandak, president of SEMI India and the India Electronics and Semiconductor Association. "But software, scale and customer adoption remain the real tests."

The market opening

India's semiconductor market is expected to triple from US$64 billion in 2026 to US$200 billion by 2035, with consumer electronics, automobiles and industrial applications accounting for 61 per cent of demand.

AI systems increasingly need to process data locally for faster responses rather than rely on distant data centres, experts said. A car must react immediately to an obstacle. A factory camera must spot defects in real time.

G S Madhusudan, CEO of InCore Semiconductors, which develops processor technology for chip designers, said this local intelligence is spreading across products from cars and cameras to televisions and industrial equipment.

Edge chips keep working when internet connectivity fails, keep sensitive data on-site and cut cloud costs, Atomo's Parmar said. For a factory safety camera, unreliable internet could delay critical alerts, while local image processing keeps the system running regardless of connectivity. India's cost-sensitive market and uneven connectivity make those benefits particularly relevant, he added.

Atomo has also sent circuit boards for testing in Japan, South Korea and the Middle East, where response time, confidentiality and uninterrupted operation carry equal weight, Parmar said.

Consumer devices accounted for 65.3 per cent of the global edge AI chip market in 2025, driven by smartphones, laptops and smart speakers, according to market research firm Grand View Research. India's edge AI chip market is projected to grow nearly 12 times, from US$984.1 million in 2026 to US$11.7 billion by 2033.

India as a testing ground

Sunil Kumar, whose startup BigEndian Semiconductors is developing an AI-enabled processor for surveillance cameras, said specialised chips can be tailored to individual markets. A railway camera, industrial camera or vehicle can each require different hardware and software, which gives smaller companies room to compete on customisation rather than raw computing power.

India also has a large chip-design workforce. About 20 per cent of the world's semiconductor design engineers are based in the country, according to Invest India CEO and former Intel India head Nivruti Rai.

Kumar said India's scale and complexity could make it a proving ground for the technology, pointing to crowd management at the Kumbh Mela, a Hindu pilgrimage that drew more than 660 million people over 45 days in 2025.

"If I'm able to adapt to some place like … Kumbh Mela, solving the same crowd control issue in Finland is much easier," he said.

Investors are backing the sector. Indian edge AI chip startups raised US$17 million in 2026, nearly four times the US$4.27 million raised in 2022 and up from virtually nothing before 2020, according to data insights firm Tracxn.

The bigger challenge is persuading companies already using established foreign processors to switch to Indian chips, entrepreneurs told CNA.

Security rules create openings

Shashwath Ramkumar, co-founder of chip startup Mindgrove Technologies, said his company looks for moments when customers "want to change anyway" because regulations, technology or product requirements have shifted. Mindgrove is working with Indian surveillance manufacturer Prama to develop its vision chip for security cameras.

India's new cybersecurity rules for internet-connected CCTV systems, which took effect on Apr 1, have created opportunities for local chip firms as tighter rules affect some suppliers, experts said. India has not banned Chinese CCTV cameras outright, but tighter security and sourcing rules have restricted imports of some surveillance equipment from China. Chinese vendors accounted for about a third of India's CCTV market in 2024, according to Counterpoint Research.

Similar pressures are appearing in other industries. Tracxn co-founder Neha Singh said geopolitical issues and supply-chain diversification efforts are making some Indian automotive, industrial and defence manufacturers more willing to evaluate locally designed chips.

From samples to scale

Turning market opportunity into actual orders remains the hardest step. Founders of Indian edge AI chip firms expect the coming year to be decisive.

Ramkumar said Mindgrove's work with Prama could take roughly another year to produce a commercial product. BigEndian is preparing to put its first AI-camera chip into customers' hands by the end of this year.

Manufacturers may discuss their needs with chip designers, but are unlikely to place orders until they have a physical chip tested in their products, Kumar said. He described 2026 as the "year of sampling", with meaningful scale potentially emerging in the second half of 2027.

"The packaging, testing and logistics are harder than design," Ramkumar said. The challenge is building a supply chain that can reliably deliver chips at scale.

India's chip-packaging capacity is beginning to expand, easing one part of the problem. CG Semi, a joint venture between India's CG Power, Japan's Renesas Electronics and Thailand's Stars Microelectronics, began commercial production at its packaging and testing facility in Sanand, Gujarat, in July. The facility can package and test up to 300 million chips a year. Under the government's semiconductor mission, advanced packaging is a priority, with financial support offered for new assembly, packaging and testing facilities.

"The real test is whether Indian startups can make their chips easy for manufacturers to adopt, reliable at high volumes and competitive beyond India - turning customer trials into repeat orders at home and eventually winning large global customers," said Tracxn's Singh.