How AI’s memory hunger is creeping into India’s inflation and import bill

Rising global memory chip costs are driving up India’s tech import bill and consumer device prices, though low inflation weightage keeps the broader economic impact contained.

The surge in memory chip prices is beginning to leave a trail across India’s economic data. It first shows up in the country’s import bill, where the value of electronic integrated circuits used as memories is rising as much as five times faster than the volume being imported. From there, higher chip prices are making their way through the electronics supply chain, raising costs for manufacturers and, eventually, the prices paid by consumers.

Globally, this phenomenon is known as ‘chipflation’. In India, from pen drives to mobile handsets and laptops, the signs of chipflation are becoming harder to miss. For now, however, their contribution to overall inflation remains tiny because of their low weightage in the consumer price index (CPI) basket. The impact, therefore, is unlikely to be felt in a generalized manner across India, but will be more visible to consumers buying these products.

The trade-off

India is a large consumer as well as assembler of electronic products, which means its dependence on imports for input goods is high. As a result, the first sign of chipflation shows up in India’s import bill.

The AI boom and hyperscalers investing billions of dollars in data centres around the world have created unprecedented demand for memory chips, outstripping supply. AI data centres require large quantities of high-performance memory, particularly high-bandwidth memory (HBM) and server-grade dynamic random access memory (DRAM). As chipmakers have directed more capacity towards these higher-value products, supplies of conventional memory used in consumer electronics have tightened, pushing prices higher.

Prices of DRAM— the main system memory used in laptops, smartphones, smart TVs and other electronic products— serve as a benchmark and a bellwether for the storage and electronics market. These prices have skyrocketed in the past year, rising over 400% between August 2025 and March 2026, before moderating since then. The prices were still 4.7 times the level in August compared to a year ago.

When it comes to India’s import bill, one way to identify price pressures is to see the difference between value and volume growth. Until January 2026, year-on-year growth in both volume and value terms for electronic integrated circuits used as memories—the group that includes memory chips such as DRAM, static random-access memory (SRAM), flash memory, and read-only memory, among others—moved closely. This changed from February, when value growth shot up to 110%, while volume growth grew 18%. By June, this divergence had widened further: import value surged 314% y-o-y, compared with a 60% increase in volume.

“It can be indicative of only two things: one, price changes, or secondly, we are importing higher-end chips,” said Anubhuti Sahay, India economics research head at Standard Chartered Bank. “Our view is that most of it is likely to be driven by pricing increases because this is something which is a global theme.”

To be sure, electronic integrated circuits used as memories were only 12% of India’s total electronic imports, but the price rises are visible across other AI-lined segments as well. According to an analysis by Standard Chartered Bank, the 12-month rolling trade deficit in AI-enabling products—advanced semiconductors, processors, memory chips, data-processing units—and networking hardware—rose to 2.0% of GDP in July 2026 from 1.5% a year earlier. The deficit was marginally higher than India’s gold trade deficit of 1.9% of GDP.

Price pinch

Similarly, inflation in the information and communication segment, which includes electronic items such as pen drives, laptops, and mobile devices, is picking up gradually.

The sharpest rise has been in pendrives and external hard disks, where inflation jumped from 3.9% in January to 16.8% in August. Pendrives use NAND flash memory, whose supply is being squeezed as memory makers shift capacity and investment towards higher-value products.

The supply squeeze is therefore feeding into storage-device prices. External hard disks are also seeing higher prices, as demand for high-capacity storage has risen faster than manufacturers have been able to expand supply.

Mobile handsets, meanwhile, moved from deflation to inflation during the same period. Prices fell 2.3% year-on-year in January, but handset inflation crossed 3.5% in August, the highest since at least January. Mobile phones primarily use Low Power Double Data Rate (LPDDR) memory, which has also become more expensive amid the broader memory-supply squeeze.

While Indians planning to purchase any of these electronic goods will feel the price pinch, chipflation is unlikely to be felt in a more generalized manner because of its low weightage.

The information and communication segment, which also includes mobile tariffs and streaming costs, has a total weightage of 3.61% in the CPI basket. Rising costs have started adding to headline inflation, but their contribution remained limited to just 0.12 percentage points in the latest print of 4.8% overall inflation, including the impact of a sharp rise in mobile tariffs.

According to Gaura Sengupta, chief economist at IDFC FIRST Bank, the inflation in this segment will be gradual and contained to urban upper-income segment that is more exposed to high-end electronic devices. “Since CPI represents our entire country, and nearly 70% of our country lives in rural areas, the impact of AI cost pressures on headline CPI will remain contained,” Sengupta added.

About the Author

Rupanjal Chauhan is a data journalist at Mint, where she contributes to the Plain Facts and Data Bites sections, focusing on translating complex datasets into clear, insightful, and engaging narratives for a wide audience. Her work focuses on using data to explain policy, economic, and social trends in a clear and accessible way.<br><br>At Mint, her work spans public finances, trade, geopolitics, and employment, often breaking down large datasets into sharp, evidence-backed stories. Her approach focuses on careful data analysis and clear storytelling, ensuring that each piece not only informs but also enables readers to better understand the forces shaping India’s economy and society.<br><br>Rupanjal holds a postgraduate diploma in digital media from the Indian Institute of Mass Communication (IIMC), New Delhi, where she specialised in data-driven storytelling and digital journalism. She also has a bachelor’s degree in journalism and mass communication from St. Xavier’s College, Ranchi. Her work is guided by a focus on simplifying complex data without losing nuance, with an emphasis on accuracy, transparency, and context, helping readers better understand the patterns and trends behind the numbers.