In recent years, India has emerged as a potential powerhouse in the global semiconductor industry, with ambitious plans to become a key player in this crucial sector. The country’s push into semiconductors is not just about technological advancement; it’s a strategic move that intersects with economic growth, national security, and global technological competition. Strong development of semiconductor industry will strengthen India’s journey towards Viksit Bharat by 2047.
Semiconductors power everything from computers and smartphones to cars and industrial machinery. The enormous economic significance of the global semiconductor sector is shown by projections that it will reach $1 trillion by 2030.
India has long had a relationship with semiconductors. Although hardware, especially in the semiconductor industry, has trailed behind, the nation has long been recognized for its ability in software. India first created its first semiconductor laboratory in the 1960s, marking the beginning of the nation’s semiconductor ambitions.
The game-changer came in December 2021 when the Indian government announced a USD 10 billion incentive package to boost semiconductor and display manufacturing in the country. This initiative, known as the India Semiconductor Mission (ISM), aims to position India as a global hub for electronic system design and manufacturing.
India sets USD 500 billion target for electronics sector by 2030
In a significant announcement, Indian Prime Minister NarendraModi has set an ambitious goal of USD 500 billion for India’s electronics sector by 2030. This declaration was made at a recent industry event that underscores the government’s commitment to transforming India into a global electronics manufacturing hub. The target represents a massive leap from the current levels of about USD 25 billion Achieving the USD 500 billion mark would require a more than 20-fold increase in just seven years. This ambitious goal is not just about numbers; it’s a strategic move aimed at:
Job creation: The growth of the electronics sector is anticipated to create millions of jobs for people with a range of skill levels.
Reducing import dependence: By boosting domestic production, India hopes to reduce its reliance on electronics imports, which currently constitute a sizable portion of its import bill.
Enhancing Export Capabilities: The target subtly alludes to a major push towards making India an electronics export powerhouse.
Attracting Foreign Investment: Such a bold target is likely to attract substantial foreign investment in India’s electronics manufacturing ecosystem.
Technological Advancement: Achieving this target would require significant technological advancementsthroughout the electronics manufacturing value chain.
US-India collaboration in semiconductor supply chain
The United States and India’s partnership under the CHIPS Act (Creating Helpful Incentives to Produce Semiconductors) marked a significant development. The purpose of this partnership is to improve technological cooperation and diversify supply chains in order to bolster the semiconductor industries of both countries. The objectives of US-India collaboration are:
Supply Chain Resilience: By cooperating, both countries aim to lessen their reliance on individual suppliers for essential components.
Technology Transfer: The alliance makes it easier for American businesses with cutting-edge capabilities and Indian enterprises hoping to expand their operations to technology transfer.
Joint Research Initiatives: Developing next-generation semiconductor technologies that can spur innovation in a variety of industries will be the main goal of collaborative research projects.
While India’s semiconductor industry is still in its nascent stages compared to global leaders, it has made significant strides in recent years.
Skilled Workforce: India has a sizable pool of engineers and technicians, many of whom have workedon chip designs.
Design Capabilities: India has established itself as a hub for semiconductor design, with numerous global companies having design centers in the country.
Government Support: The USD 10 billion incentive package and other policy initiatives demonstrate strong government backing for the industry.
Growing Domestic Market: India’s large and rapidly growing electronics market provides a strong demand base for semiconductors.
India Semiconductor Mission (ISM)
The India Semiconductor Mission (ISM) represents a significanteffort aimed at positioning India as a globalcentre for semiconductor manufacturing. ISM, which was established in December 2021, aims to draw capital for the establishment of semiconductor assembly lines, testing facilities, packaging plants, and fabrication factories. The Indian government has allocated substantial financial incentives under ISM:
Fiscal Support: Up to 50% of capital expenditures made by businesses developing semiconductor fabs are eligible for fiscal support.
Research Grants: Projects centered on semiconductor technology research and development can receive funding.
Skill Development Programs: The government is investing in skill development and training programs to create a workforce that is proficient in semiconductor manufacturing processes.
The PLI scheme seeks to boost domestic manufacturing across various sectors, including electronics and semiconductors. Under this scheme companies can receive incentives/rewards based on their incremental sales from products manufactured in India.The PLI scheme targets both large manufacturers as well as small and medium enterprises (SMEs), encouraging a diverse range of companies to participate in semiconductor production.
The Road Ahead: A Landscape of Opportunities
India’s semiconductor sector is poised for significant change and presents a plethora of opportunities:
Global supply chain integration: In the global semiconductor network, India is in a unique position to become a critical node as businesses look to diversify their supply chains. The nation is a desirable venue for international partnerships because to its advantageous location and solid diplomatic ties.
Booming domestic market: The demand for semiconductors is expected to soar due to factors like the growing number of people using smartphones, the emergence of smart cities, and the government’s push for digital transformation.
Emerging technologies: New avenues for semiconductor applications are opened by the introduction of 5G, the Internet of Things (IoT), artificial intelligence (AI), and electric cars.
Talent pool advantage: India’s large reservoir of engineering talent is a significant asset. Every year, the nation generates more than 1.5 million engineering graduates, which supplies a consistent flow of highly qualified workers for the semiconductor sector.
Innovation hub: India has the potential to become a worldwide centre of innovation for semiconductor design. The nation’s engineering prowess and thrifty attitude to innovation can result in ground-breaking semiconductor designs that are suited for rising markets across the globe.
Space and defense applications: India offers great prospects for specialized semiconductor development due to its expanding space program and emphasis on modernizing defenses.
Automotive sector growth: With India poised to become the world’s third-largest automotive market, there’s a significant opportunity for semiconductor manufacturers in areas like electric vehicles, advanced driver-assistance systems (ADAS), and in-vehicle infotainment.
Environmental stewardship and sustainable growth
India’s foray into the semiconductor industry presents an unprecedented opportunity to build a sustainable and environmentally conscious sector from the ground up:
Green manufacturing pioneers: India has the opportunity to lead the way in green semiconductor manufacturing.
Renewable energy integration: The energy-intensive nature of semiconductor manufacturing opens up possibilities for large-scale renewable energy projects.
Water recycling innovation: India has potential to lead the way in developing methods for purifying and recycling water to be used in the production of semiconductors.
Circular economy approach: India can reduce waste and increase resource efficiency in semiconductor production by implementing a circular economy paradigm.
Eco-friendly packaging solutions: To address the growing issue of electronic waste, India can take the lead in creating recyclable or biodegradable packaging for semiconductor products.
Green delivery: From electric cars for chip delivery to energy-efficient logistics systems, the semiconductor sector may spur the development of green mobility solutions in India.
Catalyzing India’s economic renaissance
The burgeoning semiconductor industry is set to be a cornerstone of India’s economic future, with far-reaching positive impacts:
Economic powerhouse: The India Electronics & Semiconductor Association (IESA) projects that the semiconductor sector could boost India’s GDP by USD 80-100 billion by 2030.
Job creation:By 2030, it’s anticipated that the sector would create over a million direct and indirect jobs.
Export boom: As India grows its semiconductor capabilities, it can become a major exporter of both chips and chip-enabled products.
Startup ecosystem catalyst: The growth of the semiconductor industry is likely to spawn a vibrant startup ecosystem.
Attracting foreign direct investment: A considerable amount of foreign investment is already being drawn to India due to the country’s market potential and the government’s encouraging policies.
Technological self-reliance: By strengthening its technological sovereignty by lowering its reliance on imports for essential technology. This is significant from both an economic and a national security standpoint.
Global tech leadership: India may play a major role in establishing international norms and directing technological advancements in the future.
Ripple effect on other industries: The growth of the semiconductor industry will have a multiplier effect on various other sectors. From automotive to healthcare, from aerospace to consumer electronics, numerous industries stand to benefit from a robust domestic semiconductor ecosystem.
Research and development hub: India is expected to experience a spike in R&D activity as the industry expands. This might result in ground-breaking discoveries, patents, and the creation of intellectual property, further solidifying India’s place in the world of technology.
Skill development and boost to education: The demand for semiconductor professionals will drive improvements in technical education.
In conclusions, India is currently at a pivotal point in its journey towards semiconductor giant. The nation is supporting these aspirations with large investments and conducive policy support. One of the country’s ambitious goals is the USD 500 billion electronics sector by 2030. The recent encouraging developments indicate that India hold every potential to play a major role in the global semiconductor supply chains in addition to meeting its own domestic semiconductor requirements. India’s semiconductor sector may herald a new chapter in the nation’s technical history and establish India as a major participant in shaping the future of global technology and strengthen its journey towards Viksit Bharat by 2047. (Times of Oman)
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