In the realm of global technology, India is forging ahead with ambitious plans to enhance its semiconductor or chip manufacturing capabilities. Semiconductors, crucial components in modern electronic devices ranging from smartphones, EVMs, and applications of Artificial Intelligence, etc., are at the heart of India’s strategic initiatives aimed at reducing dependence on imports and establishing itself as a significant player in this pivotal ICT sector.
The Production Linked Incentive (PLI) scheme extended to the ICT sector including chip manufacturing has been a game changer. It signaled also India’s determination to bolster semiconductor manufacturing., among other things This initiative attracted global giants such as Intel, Samsung, and TSMC, recognizing India’s potential as a lucrative market and manufacturing hub. The prospect of substantial incentives and access to India’s expanding consumer base has spurred a flurry of activity in the semiconductor sector.
Recent advancements underscore notable progress toward India’s semiconductor aspirations. Tata Group is on track to launch commercial production from India’s inaugural semiconductor fabrication unit by 2026, with plans for additional facilities in the pipeline. Samsung’s pledge to invest $8 billion in expanding its semiconductor fabrication facility further underscores India’s appeal for semiconductor production.
Besides, companies like Reliance Jio and Infosys are leveraging their telecommunications and IT services expertise to drive innovation in semiconductor design and manufacturing. This collective effort from both domestic and international stakeholders is propelling India toward semiconductor self-sufficiency and also chip designing. India has a considerable capacity in chip designing and that work has been outsourced to a few software companies. With the prospects of FAB coming up in India, domestic chip-designing companies will have more work.
The Indian government’s proactive stance, through initiatives like the National Electronics Policy and Electronics Manufacturing Clusters (EMC) scheme, is fostering an enabling environment for semiconductor manufacturing. Nevertheless, challenges persist, including environmental concerns surrounding fabrication processes and the necessity for additional policy reforms, skill development and more importantly capital infusion since semiconductor manufacturing is a highly capital-intensive sector.
Addressing these challenges requires the implementation of sustainable practices and rigorous environmental regulations. Additionally, efforts to streamline regulations, facilitate ease of doing business, and invest in education and vocational training programs are imperative for sustaining India’s semiconductor manufacturing growth. Chip manufacturing is a highly competitive segment, which requires sourcing rare earth, which is hard to find out in India. Countries like China, the Netherlands, and the US are sourcing the high-demand rare earth that goes into chip manufacturing from countries like the Democratic Republic of Congo, Zimbabwe, and Latin American countries. Our embassies and high commissions should play an important role in identifying such locations for sourcing rare earth. Chip-making also requires considerable investment in R&D since the specifications of the chips keep on changing.
Despite these challenges, India’s semiconductor journey holds great promise. With robust government support, strategic investments, and a burgeoning talent pool, India is poised to emerge as a global leader in semiconductor innovation and production. As momentum gathers, India’s semiconductor industry is paving the way for a new era of technological advancement and economic prosperity.
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