Introduction

India is actively pursuing the establishment of a domestic semiconductor ecosystem to lessen dependence on imports and tackle global supply chain vulnerabilities. This initiative, launched under the Semiconductor Mission in 2021 with a USD 10 billion investment, is vital for national security, particularly in defense and telecommunications.

Current Status of the Semiconductor Industry in India

Market Overview

• 2022 Market Size: USD 26.3 billion
• Projected Growth: Expected to reach USD 271.9 billion by 2032, with a CAGR of 26.3%.

Import-Export Dynamics

• Imports: USD 5.36 billion in 2021; efforts are underway to reduce this reliance.
• Exports: USD 0.52 billion in 2022, marking the highest level to date.

Government Initiatives

• India Semiconductor Mission (ISM): Part of the Digital India Corporation, focused on developing a strong semiconductor ecosystem.
• Financial Support: Covers 50% of project costs for semiconductor and display manufacturing facilities.
• Semicon India Programme: Launched in December 2021 with ?76,000 crore (around USD 9.2 billion) dedicated to semiconductor manufacturing.
• FY24 Budget Increase: Allocated ?6,903 crore (approximately USD 833.7 million) for further development.

International Collaborations

• MoU with the European Commission: Aims to enhance semiconductor ecosystems.
• MoC with Japan: Focused on improving supply chain resilience in the semiconductor sector.

Importance of Semiconductors for India

Economic Growth and Industrial Development

• Semiconductors are crucial for enhancing India's electronics manufacturing, targeting a notable share of the projected USD 1 trillion global semiconductor market by 2030.
• The Semiconductor Mission is projected to generate 35,000 direct jobs and 100,000 indirect jobs, potentially raising electronics manufacturing to USD 300 billion by 2026.

National Security and Strategic Autonomy

• Essential for defense and telecommunications, semiconductors ensure reliable supplies for critical defense systems and secure communication networks.

Technological Self-Reliance and Innovation

• With around 65-70% of electronic components currently imported, primarily from China, initiatives aim to foster domestic innovation and reduce this reliance.

Global Supply Chain Integration

• The objective is to position India as a key player in the global electronics supply chain, increasing its current 3% share of the global electronics manufacturing value.

Job Creation and Skill Development

• The semiconductor industry is anticipated to drive job creation and skill development, enhancing STEM education and research in advanced technologies.

Challenges Facing India's Semiconductor Aspirations

Infrastructure Issues

• India faces significant infrastructure challenges, including unreliable power supply and water shortages that impact semiconductor production.

Talent Shortage

• There is a projected need for 250,000 to 300,000 skilled professionals in semiconductor fields by 2027.

High Manufacturing Costs

• Semiconductor manufacturing is capital-intensive, and operational costs in India are generally higher compared to established hubs like Taiwan and South Korea.

Global Supply Chain Vulnerabilities

• Global supply chain disruptions, exacerbated by events such as the Russia-Ukraine conflict, present risks to India's semiconductor goals.

Environmental Challenges

• The energy-intensive nature of semiconductor manufacturing raises concerns about its environmental impact, particularly regarding greenhouse gas emissions.

Competition from Other Emerging Markets

• India faces competition from countries like Vietnam and Malaysia, which are successfully attracting semiconductor investments with favorable conditions and incentives.

Strategies for Advancing India's Semiconductor Vision

Enhance Education and Training

• Expand semiconductor engineering programs and collaborate with global companies to develop relevant curricula and hands-on training.

Develop Domestic Chip Design Capabilities

• Invest in chip design by establishing dedicated centers in technology hubs to encourage innovation.

Build a Comprehensive Supply Chain

• Create a robust domestic supply chain by attracting investments across all segments, from raw materials to advanced packaging.

Establish a Sovereign Semiconductor Fund

• Launch a dedicated fund for semiconductor projects to provide long-term investment and reduce reliance on foreign funding.

Implement a "Chip Diplomacy" Approach

• Use India's geopolitical position to negotiate technology transfers and partnerships with leading semiconductor nations.

Launch a "Green Semiconductor" Initiative

• Aim to become a leader in sustainable semiconductor manufacturing by minimizing environmental impacts.

Create a National Semiconductor Commons

• Establish shared infrastructure for research and prototyping to lower barriers for startups and promote innovation.

Conclusion

To fulfill its semiconductor aspirations, India must enhance education and training, develop a strong supply chain, and foster strategic collaborations. By addressing infrastructure challenges and skill gaps while promoting sustainable practices, India can secure its position as a significant player in the global semiconductor industry and strive for technological self-reliance.