The Covid lockdown and closure of factories led to a global chip shortage, as the semiconductor industry is an essential part of all electronic goods. (Representational image)
Seeing the worldwide situation, India understood the importance of becoming self-reliant. PM Narendra Modi said during Digital India Week-2022 last year that he wants India to turn from “chip taker to chip maker”.
Despite the launch of the Center India With the Semiconductor Mission in 2019 and the Production Linked Incentive (PLI) scheme in 2021, a fully operational chip manufacturing ecosystem may take a few more years, says an expert.
In an exclusive interview with News18, Anurag Awasthi, Vice President, India Electronics and Semiconductor Association, said: “While there is a huge amount of design skill, it will take two-three years to build and operate the entire manufacturing ecosystem. This will not only involve building construction, but also plugging into global and indigenous supply chains of critical materials, chemicals and gases.
After the pandemic hit the world, many chip-making facilities were shut down in places like China, the US, Japan and South Korea. The Covid lockdown and closure of factories led to a global chip shortage, as the semiconductor industry is an essential part of all electronic goods.
Seeing the worldwide situation, India understood the importance of becoming self-reliant. PM Narendra Modi last year during the Digital India Week-2022 had said that he wanted India to turn from “chip taker to chip maker”.
the challenges
“The big players will be here. It is a land of opportunity with great human capital, demand as well as a multi-sectoral manufacturing ecosystem, which is on the upswing. Whether these players come as technology partners, on standalone mode or start joint ventures, will be aided by shrewd government policies in this domain,” said Awasthi.
But according to Awasthi, there will be some challenges too. He believes that there will be major challenges related to skill development, both in design and manufacturing. According to the industry expert: “With a huge stimulus being offered by the industry, academia and the government, it is unlikely to subside immediately, but definitely in the future.”
Can India beat America and China?
This is not the first time that India is entering the semiconductor industry. The country was a serious contender as a site for an Intel chip plant in the mid-2000s. But it was reported that the plan failed when the United Progressive Alliance (UPA) government failed to implement the Semiconductor Investment Policy on time.
At the time, Craig Barrett, chairman of the board of Intel Corporation, said: “The Indian government was a little slow in coming through with its semiconductor manufacturing proposal and missed our window of time that we would have to deliver the next tranches of our manufacturing capacity. That’s a fact.” That’s the story.
But now the story is different. India has the policies and framework to see the industry flourish on Indian soil.
So far, there have been two big announcements of the past year – ISMC’s fab in Karnataka, a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor, and Vedanta-Foxconn’s chip plant in Gujarat.
However, to surpass the US and China, India’s mission is to provide tax incentives in the tens of billions of dollars and a few elsewhere. For example, the European Union, which holds 10% of the global microchips market, as well as the US and China have announced major semiconductor initiatives. This includes a €43 billion package in the EU Chips Act, a $50 billion package in the US Chips and Science Act, and a 1 trillion yuan ($143 billion) support package for the semiconductor industry in China.
Awasthi, however, said, “We do not need to challenge the US or China as India has enough domestic demand and a market for it.” Indian Semiconductors’ efficient handling of the mission, faster decision-making cycles, dynamic business promotion policies and Indian talent will be the drivers to achieve the set benchmarks.
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