India’s Semiconductor Industry Gains Momentum with Strategic Push
India is making significant strides in its quest to become a global semiconductor manufacturing leader, driven by investments, policy reforms, and collaborations. The semiconductor industry is vital for technological advancements, powering devices and innovations that have transformed society. However, despite being one of the largest consumers of semiconductors, India has been lagging behind in domestic production. Now, with a strategic and concerted effort from stakeholders, including the government, industry players, academia, and research institutions, India is poised to embark on a semiconductor revolution.
In the global semiconductor value chain, countries like the US, Japan, South Korea, Taiwan, and the Netherlands dominate the landscape. Export restrictions on high-end chips from these countries during the Sino-US trade war highlighted the urgency for domestic chip manufacturing in India. To achieve this goal, India needed a comprehensive semiconductor policy that encompassed research and development, talent development, infrastructure, and incentives for manufacturing. In response, the Indian government recognized the importance of developing the domestic semiconductor industry and launched initiatives to support its growth.
One significant initiative is the Semicon India Programme, approved by India’s Union Cabinet in 2021. With an outlay of over $10 billion, this program aims to develop a sustainable semiconductor and display manufacturing ecosystem in the country. Later renamed as the ‘Modified Semicon India Programme’ in September 2022, the revamped program offers increased competitiveness and additional subsidies. These initiatives attracted industry players like Vedanta, which expressed its intention to establish a semiconductor plant in partnership with Foxconn as part of the government’s Production-Linked Incentive (PLI) scheme. The joint venture selected Gujarat as the location for the project, with a substantial investment of $20 billion.
While the joint venture with Foxconn did not materialize, Vedanta remains committed to entering the semiconductor industry. The company plans to acquire semiconductor and display businesses from Twin Star Technologies, becoming the first Indian company in the integrated semiconductor and display fab business. 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.
These developments are expected to propel India’s semiconductor market, with projections of reaching around $85 billion by 2030. This growth is further supported by the global trend of companies adopting the China +1 policy, diversifying manufacturing locations and reducing reliance on China. However, to capitalize on this growth potential, India needs to bridge the gap in specialized skills and knowledge required for the semiconductor industry. Establishing centers of excellence, fostering collaborations between academia and industry, and providing world-class training programs are essential for developing a skilled workforce.
Additionally, the lack of cutting-edge infrastructure for advanced chip fabrication poses a challenge. To address this, the government must incentivize domestic and foreign investments in the semiconductor industry by offering financial support, subsidies, and infrastructure development. Public-private partnerships can also play a pivotal role in establishing semiconductor manufacturing clusters, emulating successful models from other countries.
India’s semiconductor ambitions are at a critical juncture. While challenges exist, tremendous opportunities await. With a comprehensive semiconductor policy, investments in talent development and infrastructure, protection of intellectual property rights, collaborations, and sustainability efforts, India can pave the way for a semiconductor revolution. The Ministry of Electronics & Information Technology’s efforts in attracting global semiconductor partners and enabling India’s dream of becoming a superpower and global leader in semiconductor design and manufacturing have been commendable.
India’s strategic push for a semiconductor revolution is gaining momentum, propelling the country towards a brighter future at the forefront of technological innovation.