The semiconductor industry is the backbone of modern technology, driving innovations that have transformed the world as we know it. From the microprocessors in our smartphones to the advanced chips powering artificial intelligence and autonomous vehicles, semiconductors have become indispensable to our daily lives and the global economy. However, despite being one of the world’s largest consumers of semiconductors, India continues to lag behind in domestic semiconductor production.
The global semiconductor value chain is dominated by countries like the US, Japan, South Korea, Taiwan, and the Netherlands. Amidst the Sino-US trade war, export restrictions on high-end chips from these countries highlighted the need for domestic chip manufacturing in India, fuelling the country’s aspiration to become a global leader in semiconductor manufacturing. However, this aspiration cannot be treated as mere rhetoric. It requires a strategic and concerted effort from all stakeholders, including the government, industry players, academia, and research institutions.
While the ‘Make in India’ initiative has made strides in various sectors, the semiconductor industry demands an exceptional level of focus and investment.
One of the primary challenges that India faced was the absence of a comprehensive semiconductor policy. Countries such as China, the US, and South Korea have formulated ambitious national strategies to bolster their semiconductor capabilities. For decades, India lacked a cohesive roadmap that encompasses areas such as research and development, talent, infrastructure, and incentives for semiconductor manufacturing. The country urgently needed a dedicated policy framework that encouraged innovation, supported indigenous start-ups, and attracted global semiconductor giants to set up fabrication units in India.
However, this changed when the Indian government recognised the importance of developing its domestic semiconductor industry and began launching initiatives to support its growth. For example, in 2021, India’s Union Cabinet approved the Semicon India Programme (Program for Development of Semiconductors and Display Manufacturing Ecosystem in India), with an outlay of Rs 760 billion (>US$10 billion) for the development of a sustainable semiconductor and display manufacturing ecosystem in the country. Later, it was modified and relaunched as the ‘Modified Semicon India Programme’ in September 2022, with increased competitiveness and additional subsidies.
In February 2022, Vedanta made known its intention to establish a semiconductor plant in partnership with Foxconn (Hon Hai Precision). This move was part of the government’s PLI (Production-Linked Incentive) scheme, and it aimed to position India as a significant semiconductor hub. Other players such as ISMC and the Interuniversity Microelectronics Centre, also sought to set up semiconductor fabrication units under the same scheme. The Vedanta-Foxconn joint venture selected Gujarat as the location for its semiconductor project, with an investment of Rs 1.5 trillion. The project included a fabrication plant worth Rs 945 billion and a semiconductor fabrication and outsourced assembly and test plant worth Rs 600 billion.
While the joint venture with Foxconn did not materialise, Vedanta remains committed to entering the semiconductor industry. The company intends to acquire semiconductor and display businesses from its sister concern Twin Star Technologies, becoming the first Indian company in the integrated semiconductor and display fab business.
Besides Vedanta, the Tata Group is also making strides in semiconductor chip manufacturing through Tata Electronics, and US-based Micron Technology has plans to construct a chip assembly and test facility in Gujarat.
The Indian semiconductor market is projected to grow significantly, reaching around US$ 55 billion by 2026 and US$ 85 billion by 2030. The investments in the sector, along with the China +1 policy adopted by global companies, aiming to diversify manufacturing locations and reduce reliance on China, will contribute to India’s emergence as a prominent semiconductor hub. However, this can only be made possible by leveraging the vast manpower through skill development. India has a rich pool of engineering graduates, but the semiconductor industry demands specialised skills and knowledge. This gap must be bridged by establishing centres of excellence, fostering collaborations between academia and industry, and providing world-class training programmes.
Another pressing issue plaguing the semiconductor sector in India is the lack of cutting-edge infrastructure. Advanced chip fabrication facilities require massive investments, and private players often shy away due to the substantial risks involved. To overcome this hurdle, the government must play a pivotal role by offering financial incentives, subsidies, and infrastructure support to encourage both domestic and foreign investments in the semiconductor industry.
Moreover, public-private partnerships can facilitate the establishment of semiconductor manufacturing clusters, similar to the successful models in other countries.
India stands at a critical juncture in its semiconductor ambitions. While the challenges are immense, the opportunities are equally vast. By forging a comprehensive semiconductor policy, investing in talent development and infrastructure, protecting IPR, fostering collaborations, and promoting sustainability, we can pave the way for a semiconductor revolution in India.
The Ministry of Electronics & Information Technology has been doing a phenomenal job in the last many years in pushing the world-class policies, procedures, and initiatives to attract the global semiconductors partners and put their best foot forward to enable India’s dream of becoming a superpower and a global leader in semiconductor design and manufacturing.
Sanjay Gupta, Chairman of IESA, India Electronics & Semiconductor Association. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views.
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