With the global chip shortage, fuelled by the Covid-19 pandemic and geopolitical circumstances, affecting several smartphone and automobile industries, the government has launched the ‘Semiconductor Mission’ to establish a self-reliance and give boost to India’s fast-expanding electronics manufacturing and innovation ecosystem.
The Union Cabinet has approved the ‘Semicon India’ programme with a total investment of Rs 76,000 crore in the growth of the country’s semiconductor and display manufacturing ecosystem.
The main objective of the programme is to provide financial assistance to companies that invest in semiconductors, display production, and the design environment. This is expected to pave the road for India’s increased participation in global electronics value chains and become a global semiconductor manufacturing hub.
Under this semiconductor initiative, four schemes have been introduced – for instance, scheme for setting up of Semiconductor Fabs in India, Display Fabs in India, Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India and Design Linked Incentive (DLI) Scheme.
Through ‘India Semiconductor Mission’ (ISM), the central government wants to encourage the use of secure microelectronics and the establishment of a reliable semiconductor supply chain, including raw materials, speciality chemicals, gases, and production equipment.
It also wants to promote and facilitate indigenous Intellectual Property (IP) generation, encourage, enable and incentivise the Transfer of Technologies (ToT), and collaborations with national and international organisations to catalyse research, commercialisation and skill development.
Therefore, for international collaborations, reports suggest Indian and Taiwan have been in talks to establish a semi-conductor manufacturing hub in India. Taiwan is globally known for having the world’s largest semiconductor company TSMC or Taiwan Semiconductor Manufacturing Company.
What Experts are Saying
Deepak Pahwa, Managing Director Bry-Air, told News18 that the mission launched by the central government will help the country to emerge as the global semiconductor manufacturing hub. “India is rising to the occasion where with the right talent, skill, technology, and infrastructure it can become the leader in semiconductor manufacturing, designing, and innovation,” Pahwa said.
“But in the mission, it is really crucial to focus on the ancillary industries that can render quality end products that remain unrivalled across the globe. Not complying with the precise manufacturing conditions can be responsible for substandard semiconductors that will hurt the country’s position in the global market,” Pahwa added.
As components in a semiconductor are hygroscopic in nature, humidity can have a corrosive effect and cause chip failure. Therefore, the government should establish a “powerful, highly resilient manufacturing base”, suggested Pahwa.
Another industry expert, Sonny Kunnakkat, Managing Director, Worldwide Operations, Applied Materials India Private Ltd said because of the pervasiveness of technology and big advancements such as 5G, EV, and AI, chips are more vital to the globe than ever before.
He believes that all of these demonstrate the critical importance of the India Semiconductor Mission in developing the country’s electronics manufacturing ecosystem.
According to him: “Working closely with the ISM, we see the PLI scheme for semiconductor and display manufacturing has encouraged businesses in these segments in India to scale up indigenous electronics manufacturing, which is a very positive outcome.”
“These businesses require a strong ecosystem of high-quality materials, special processes, innovative equipment, and world-class research. We are excited to see the ISM looking to identify and support a local supply chain and a skilled talent pool, so the ecosystem can sustain itself for years to come,” the expert added.
Sanjay Gupta (India Head), Vice President and India Managing Director, NXP Semiconductors said: “With ISM taking India’s leadership in the technology space to the next level, we are surely moving towards economic independence and giving India a new face on the global manufacturing map.”
He noted that many countries are discussing collaborating with India in making the chips which are needed for electronics items, communications devices, health care systems and motor vehicles.
Gupta further said: “Due to the efforts of governments, companies are filing applications for semiconductors and displaying fab units revealing how India is forging ahead in becoming the semiconductor manufacturing hub.”
India Joins The Race
At this moment, Asian players from the mainland of China, Taiwan and South Korea have a monopoly in the chip manufacturing market. After a sudden bump faced by these players during the peak of the pandemic, all these countries are now scaling up their chip manufacturing capabilities and also investing tens of billions of dollars in the business.
Meanwhile, the US approved its most awaited CHIPS Act to increase semiconductor manufacturing in the country, by investing more than $52 billion with an aim to combat China’s chip-making power and boost its own economy.
But India is also participating in this race now. During the Digital India Week-2022, which took place in early July, Prime Minister Narendra Modi stated that India wants to become a “chip maker from a chip taker”.
During his speech, Modi stated: “Today, India is working on the target of taking electronics manufacturing to more than $300 billion in the next 3-4 years. India wants to become a chip maker from a chip taker. Investment is increasing rapidly in India to increase the production of semiconductors.”
Initiatives Taken by States
It should be noted that in early July, Karnataka’s Minister for Electronics, IT/BT, and Science and Technology, Dr C N Ashwath Narayan urged investors to take advantage of the state government’s ‘Open Land Reforms Policy’ to help the semiconductor industry flourish.
At the ‘Semiconductor Industry Connect 2022’ in Karnataka, the minister also said to develop the Electronics System Design & Manufacturing, Skill Development (ESDM), the state government is considering creating a semiconductor park and a testing lab.
Additionally, Karnataka, which introduced its semiconductor policy in 2008-2009, and the International Semiconductor Consortium (ISMC), based in Israel, signed a memorandum of understanding (MoU) earlier this year to invest a total of Rs 22,900 crore in the state to build the first and largest semiconductor chip manufacturing facility in the nation.
However, the Gujarat government recently announced the ‘Gujarat Semiconductor Policy 2022-2027’ to attract investment in the chip manufacturing sector in Gujarat under ISM.
Gujarat’s minister of Science and Technology Department Jitu Vaghani said the state government will provide an additional assistance at a rate equal to 40% of the capital assistance provided by the centre for the projects approved by ISM under the Ministry of Electronics and Information Technology.
It was also said under the policy, Dholera Semicon City will be established in the Dholera Special Investment Region (Dholera SIR), and eligible projects will receive subsidies of up to 50% for additional land needed for fab projects, upstream/downstream and other projects authorised under ISM, as well as 75% for the first 200 acres of land they purchase.
Even in Maharashtra, this week, the mining giant Vedanta and Taiwan’s electronics manufacturer Foxconn met with Chief Minister Eknath Shinde and his deputy Devendra Fadnavis to propose an investment of Rs 1,742,290,000,000.00 ($22 billion) in a manufacturing facility for semiconductors that would generate around 200,000 jobs.
It was reported that Talegaon in Pune has become a popular candidate for the facility due to its high concentration of qualified labour, port accessibility and industrial infrastructure, among other things.
The initiatives by the states and Centre highlight that India is ready to accomplish its goals and attract more companies to invest in the country.