McKinsey’s “Build for India” Arenas and India’s Self-Reliance Push

The glamour sectors in India’s growth story, including AI, space, and software services, tend to dominate headlines. But the most structurally important part of ‘McKinsey’s Future Arenas’ framework sits in a very different corner: the “Build for India” archetype. These arenas are not momentum stories or rapid scale-up plays. They are long-duration, capability-building endeavours that underpin almost every other part of the economy.

According to McKinsey, four arenas fall into this category: semiconductors, industrial electronics, robotics, and nuclear fission. Each is capability-light in India today, each is capital-intensive, and each has strategic implications that go well beyond commercial outcomes. These four arenas matter because they sit at the foundation of India’s future competitiveness. Their development is slower and harder than the rest of the arena map, but the consequences of not building them are meaningful.

Why These Four Matter Disproportionately

The “Build for India” arenas function as chokepoints, sectors where insufficient domestic capability limits progress everywhere else. Semiconductors and industrial electronics are embedded across almost every modern system, including electric vehicles, telecom networks, industrial machinery, cloud infrastructure, and defence platforms. Without a deeper domestic base, India remains reliant on concentrated global supply chains for critical components.

Robotics becomes essential as Indian manufacturing scales. As labour costs rise and compliance norms tighten, productivity gains increasingly depend on automation; without robotics capability, India risks falling behind precisely at the moment it is trying to expand its manufacturing share. Nuclear fission underpins long-term decarbonisation. Even with ambitious renewable targets, India’s energy system remains exposed to imported fuels, intermittency, and grid constraints. Nuclear offers baseload stability, but scaling it requires multi-decade planning and institutional capacity.

These are not optional upgrades. They are the building blocks for competitiveness in EVs, aerospace, cloud, defence, and advanced materials, the kinds of arenas McKinsey classifies as global-scale opportunities. The state has already begun to move pieces into place: a $10 billion semiconductor incentive programme to attract fabrication, assembly, and testing; production-linked incentives and capex support aimed at electronics manufacturing; and long-dated nuclear ambitions, including an aspirational 100 GW capacity target by 2047. The timeline for all of this is measured in decades, not years, and that is the point: these sectors set the platform upon which others can scale.

Layers of Capability in “Build for India” Arenas

“Build for India” arenas involve heavy policy dependence, long payback cycles, high capital intensity, and deep global competition from incumbents with decades of accumulated intellectual property. Yet McKinsey does not suggest these sectors are closed to private investment. Instead, the more investable opportunities tend to sit in specific layers of the stack rather than in the mega-projects themselves.

At the top of that stack are design, software, and IP-rich niches. They have lower capital intensity than full-scale fabrication or plant construction. Examples include chip design, design automation tools, and verification IP in semiconductors, as well as embedded systems, control software, and specialised firmware for robotics and power electronics.

A second layer consists of components and subsystems, which are critical modules where India can plug into global value chains without owning every step of production. That might mean power modules, sensors, advanced PCBs, and actuators in electronics and robotics, or instrumentation, control systems, and fuel-handling technologies in nuclear.

A third layer is ecosystem services, where capability-building meets operational know-how. Specialist engineering, procurement, and O&M providers for nuclear or high-precision electronics facilities, and robotics integrators for factories, logistics networks, and warehouses, fall into this category. These niches are where private investors typically operate alongside strategic corporates, state-owned entities, and long-duration pools of capital. They are not spray-and-pray markets; they are deep-tech and industrial plays with meaningful entry barriers.

What the McKinsey Playbook Suggests

The report’s recommendations for this archetype are less about picking individual winners and more about enabling capability formation. It emphasises the need for patient domestic capital: sectors with 15–20 year horizons require insurers, sovereign funds, pension platforms, and public–private investment vehicles that can absorb long cycles and policy-driven returns. It argues for export-linked incentives rather than support tied only to domestic sales, on the logic that shallow, protected markets do not produce globally competitive ecosystems; in semiconductors, robotics, and electronics, cost and quality at world standards ultimately matter more than short-term volume.

McKinsey also stresses the importance of modular, open ecosystems. Encouraging SMEs, design houses, and subsystem specialists to plug into larger programmes reduces the risk of the entire system being bottlenecked by a few vertically integrated players. Finally, it calls for applied R&D platforms: joint labs and consortia linking academia, industry, and government, with a focus on commercially relevant outcomes and IP rather than purely academic output. Taken together, these levers frame “Build for India” as a capability agenda, not just a growth thesis.

Risk Factors That Are Hard to Ignore

The hard questions remain, and McKinsey is clear that many of these arenas involve real uncertainty. In semiconductors, it is valid to ask whether India can realistically catch up across the full stack, or whether the more realistic opportunity lies in packaging, design, and specific process nodes where global competition is less entrenched. In nuclear, regulatory processes, safety norms, and public acceptance could slow the pace of expansion relative to headline targets. In robotics, adoption will have to scale in an MSME-dominated manufacturing base where balance sheets are often thin and investment in automation has historically been limited.

Even so, partial progress matters. Every step forward in these arenas reduces structural import dependence and improves bargaining power across the broader economy. But the distribution of returns is likely to be uneven: a handful of strong outcomes in design, components, or subsystems, surrounded by a long tail of slow-moving, marginal, or stranded projects.

The Broader Context

McKinsey’s Future Arenas framework is ultimately a prioritisation tool. The “Build for India” arenas do not fit conventional high-growth narratives, but they anchor the possibility of India achieving the more visible ambitions in AI, space, EVs, medical devices, and other global-facing arenas.

These four sectors are long-duration bets. They require patient capital, policy stability, and an acceptance that progress will be lumpy. They also sit at the heart of what makes the rest of the arena map viable. If India is to expand its share of global GDP meaningfully by 2040, these foundation stones matter as much as the frontier stories built on top of them.

Chief Brand & Investor Relations Officer

Sneha Dadrwal

Frequently Asked Questions

Q: What are “Build for India” arenas in this context?

A: They refer to sectors like semiconductors, industrial electronics, robotics, and nuclear fission, where India’s current capabilities are relatively limited but seen as strategically important for self-reliance and long-term competitiveness.

Q: Why are these arenas described as challenging from an economics standpoint?

A: They tend to involve high capital intensity, long payback periods, significant policy dependence, and competition with global incumbents that already hold strong technology and intellectual property positions.

Q: What does the “stack” inside these arenas mean?

A: The stack describes different layers of activity, ranging from design and software at the top, through critical components and subsystems, down to ecosystem services such as specialised engineering, operations, and integration for complex facilities.

Q: Why is it useful to think in terms of layers or a stack here?

A: Looking at layers helps separate very large, capital-heavy projects from more focused areas where capabilities can be built step by step, linked into global value chains, and combined with operational know-how rather than trying to control every part of production at once.

Sources

1. McKinsey
2. Business Standard
3. Fortune India