As India is working to set up a semiconductor manufacturing unit in the country, the Union Minister of Information and Technology has said that he hopes to approve the setting up of at least two such manufacturing plants in the country by next year. Here is a sneak peak into what the centre is planning to get the industry up and running.
Union Minister of Information and Technology, Ashwini Vaishnaw, has promised the country that a first-of-its-kind, Made in India semi-conductor chip will be introduced by December 2024. Once it gets in the market, this chip is likely to bring about a drastic fall in the prices of mobile phones, computers, medical equipment, appliances, and gaming hardware.
Gujarat will be the first state to set up a factory where these semiconductor chips will be manufactured, and other states will follow. The central government has been in talks with the biggest players across the world that can help set up a semiconductor manufacturing plant in India.
Foxconn is one of the top contender companies that India is likely to collaborate with to get this manufacturing plant up and working. The company has an estimated 60 billion dollar annual semiconductor business. Another big brand, Micron, with its factories spread across several countries, is also in talks with the Indian government.
PM MODI’S DREAM
Prime Minister Narendra Modi has been pushing to get the semiconductor business running in India. While inaugurating the Semicon India 2023 conference in Gandhinagar on Friday, he officially announced that the government has rolled out the red carpet for the semiconductor industry.
Encouraging industrialists and investors to get into the semiconductor business, PM Modi said, “Technology firms will be given 50 per cent financial assistance for setting up semiconductor manufacturing facilities in the country.” He further said that India is establishing an entire ecosystem for the semiconductor industry to grow in the country.
“The semiconductor industry will witness exponential growth in India. Our country will become a grand conductor for investments in the semiconductor sector,” the prime minister said during the inauguration.
Given the technicalities involved in the process, some corporate experts in the United States had told Prime Minister Narendra Modi and Information Technology Minister Ashwini Vaishnaw that they needed an entire ecosystem in place before setting up the shops. So the government started working on setting up the eco-system on war footing.
For the first factory to be set up without any issues, the basic need is a clear policy from both the state as well as the central government, coupled with an efficient eco-system in place.
Besides, the Indian government’s $10 billion incentive scheme for building the semiconductor industry has pegged the financial subsidy for the project cost of the manufacturing plant based on the chip size.
2 MANUFACTURING PLANTS NEXT YEAR
Speaking with India Today about the plan, Minister Ashwini Vaishnaw said the government should be able to approve two high-quality semiconductor chip fabrication proposals in the coming 12 months.
“The electronics manufacturing industry will grow to $300 billion in the coming five years. Within a few years of the production-linked incentive schemes being announced, there will be similar growth in the semi-conductors industry too,” he said.
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Elaborating how semi-conductor will catapult India’s growth story, the minister said, “India’s Semiconductor Mission will ensure that companies willing to set up shops in India do so as a natural business decision, not just on geopolitical and supply chain considerations. We have listened to them and have made an entire ecosystem to support them.”
INDIA’S TRYST WITH SEMI-CONDUCTORS
India’s journey in the semi-conductor manufacturing field is sadly littered with many missed opportunities. The country has been trying to establish itself in this space since the 1960s, but in vain.
In the 60s, the country missed out on the Fairchild Semiconductor manufacturing plant because of regulatory and bureaucratic hurdles.
During Indira Gandhi and Rajeev Gandhi’s tenure, India’s economy and inward-looking policies deterred companies from considering India. Despite a promising start by public sector undertakings in this sector, India failed to capitalise on the immense potential demonstrated in the early days.
Bharat Electronics Ltd (BEL) and some other labs and institutions were not able to achieve the volume needed for competitiveness, nor did they have the state-of-the-art technology to be a leader in the industry. India missed out to Intel’s global expansion in the late 2000s to Vietnam.
One of the biggest reasons behind India missing the train has been policy paralysis. There was a lack of coherent vision and inordinate delays in drafting a formal policy on semiconductor manufacturing.
In fact, India’s major VLSI fabrication plant at the Semiconductor Complex Limited in Chandigarh started production well before Taiwan’s foray into semiconductor manufacturing.
But after a massive fire in 1989, it remained shut for many years. The inability of successive governments to swiftly restart operations at SCL was one the reasons why India wasn’t able to make a mark in the semi-conductor space. By 1997, new entrants like TSMC and Samsung had entered the race. And they quickly raced ahead of the rest of the world, capturing critical global market share and scale.
Now it seems like India has finally jumped on the bandwagon and the pedal is firmly on the accelerator to make India a major player in the semi-conductor sphere.
https://www.indiatoday.in/amp/india/story/indias-semi-conductor-industry-where-we-are-and-what-we-need-2413815-2023-07-30
