Government plans to boost semiconductor manufacturing
NEW DELHI: India finally took a giant leap towards getting semiconductor and display fab manufacturing into the country through a Rs 76,000-crore incentive package, the move coming at a time when shortages in the supply of the critical component have hit industrial production across automobiles, electronics and other technology-led sectors.
Previous efforts at getting companies to invest in India had not yielded much results, but the government feels that the presence of a strong domestic market as well as suitable incentives and enablers will get the companies in this time. Communications and IT minister Ashwini Vaishnaw announced the decision after the Cabinet meeting, chaired by Prime Minister Narendra Modi, cleared the proposal, which seeks to put India in the global league of top electronics manufacturing nations such as China, Taiwan, South Korea and Malaysia.
TOI was the first to report on the incentive package for semiconductors in its edition dated November 1.
With no local manufacturing, India meets its semiconductors needs through imports, which is estimated to reach around $100 billion by 2025 from the about $24 billion now.
Foreign exchange outflows have been assuming alarming proportions with rapid growth in the adoption of digital products such as smartphones, laptops, electronic gadgets and IoT devices as well as new-age cars and vehicles.
The biggest pinch from the absence of local manufacturing was felt at the time of the Covid-19 lockdown when a global surge in the demand for electronics saw a worldwide shortage of chips, hitting countries like India the most. This prompted the government to quickly stitch up a comprehensive incentive package, which worked towards building up an ecosystem, and the entire process was overseen by the Prime Minister’s Office.
The government is in talks with top global companies such as Taiwan Semiconductor Manufacturing Co, Intel, AMD, United Microelectronics Corp, and Fujitsu, among others. In India, Tata Group and Anil Agarwal’s Vedanta have also spoken about their interest in semiconductors.
Vaishnaw said that incentives have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging and semiconductor design.
“Today’s historic decision will boost development of the complete semiconductor ecosystem, ranging from design, fabrication, packaging, and testing,” Vaishnaw said.
The government expects that around 1.35 lakh jobs will be generated through the measure over the next four years.
Vaishnaw said that while electronics manufacturing in the country currently stands at around $75 billion, it is expected to grow to as much as $250 billion over the next five years. “Imagine, how much we will benefit if this surge is met by local manufacturing of chips. The industry tells me that with local sourcing, we can even touch $300 billion dollars in electronics manufacturing.”