Semiconductor chips or Integrated Chips (ICs) are the life source of all digital devices as they have integrated themselves into every type of electronics product known to mankind. This strengthens the significance of semiconductors and confirms the reason for the recent uproar we are witnessing due to the semiconductor chips shortage.
As India moves to solidify its position as the upcoming manufacturing hub at the world’s stage, the two most important things it requires are the expertise of the manufacturing industry top makers as well as a solid foundation of infrastructure.
Semiconductor Manufacturing in India has become the need of the hour as it acts as the base of all electronics products but setting up a semiconductor fab is not as simple as it seems.
Though no country has so far established complete autonomy in the semiconductor value chain, the top chipmakers like TSMC, Intel and Samsung are capable of supplying monumental amounts of chips all over the world. India’s road to becoming a semiconductor manufacturing hub is full of hurdles.
Despite all these transgressions, all hope is not lost as the future of Semiconductor Manufacturing in India is still bright as India is the home of one of the largest digital subscriber bases.
But before going further about the steps and incentives taken for setting up Semiconductor Manufacturing in India, let’s understand the reason behind the need for semiconductor fab in the first place.
Why Do We Need Semiconductor Manufacturing in India?
India’s big project to gear up for a $5 Trillion economy by 2025, has pushed open the doors of manufacturing in the country. After sensing an urgent need for self-sufficiency and the global semiconductor chip supply crisis during the pandemic, has hardened the government’s resolve to hasten Semiconductor Manufacturing in India.
With many industries struggling to meet the rising demand for electronic goods and components, this is the peak time for India to rise the ranks of joining the semiconductor manufacturing league.
Since Semiconductor Manufacturing in India requires high investment and infrastructure to be laid out as previously mentioned, India’s manufacturing cannot escalate without external help as of now.
And this is where the big companies come into play.
How is India Attracting Major Investments for Semiconductor Fabs?
India has been dabbling in semiconductor manufacturing for decades but has proven to be futile. Reducing reliance on imports and having trusted partners have been the main goal for India but it was difficult to attract multinational companies to set up semiconductor fabs due to the rigid stance of subsidy and incentives.
Nevertheless, a major shift has been seen in the last few years, due to which the digital subscriber base in India has increased exponentially. This sudden shift has made the country a favorite hotspot for companies to design chips but manufacturing is still elusive.
Seeing the current scenario, Semiconductor Manufacturing in India is more likely to start with assembly, testing, marking, and packaging (ATMP) as well as setting up specialty fabs. But is it the correct solution?
Let’s take a look at some of the government’s initiatives for attracting major investments in the semiconductor sector.
- As stated in the Union Budget 2017-18, the Government of India had increased the allocation for incentive schemes like Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF) to boost Semiconductor Manufacturing in India.
- The Union Cabinet also approved an incentive of up to Rs 10,000 crore for investors by amending M-SIPS, to encourage new investments and generate more jobs while reducing reliance on imports.
- Ministry of Electronics and Information Technology (MeitY) has also planned to revise its policy framework, to enable the government to play an active role in developing Semiconductor Manufacturing in India.
- An Electropreneur Park was recently set up at Delhi University to incubate 50 early-stage start-ups.
- On IESA’s recommendation, the Government of India is adopting a customized incentive approach as they are now open to raise the incentive amount depending on the investment the particular company is bringing to the country while promoting PLI’s scheme.
- Another step taken by India’s government is the active engagement of the government with the top companies as they have received around 20 expressions of interest (EoIs) so far.
As Tata Group has recently expressed its interest to make a foray into Semiconductor Manufacturing in India, the chip industry is all set to see a sonic boom in the next few years. Supported by the government’s customized incentive schemes and further start-up-friendly environment, the time is not far when India will rise to compete with chip industries on the global stage.