Semicon India 2023: How government’s support and will built the semiconductor industry

Source: The post is based on the article “Semicon India 2023: How government’s support and will built the semiconductor industry” published in “The Indian express” on 29th July 2023.

Syllabus: GS3- Effects of liberalisation on the economy, changes in industrial policy and their effects on industrial growth.

News: In this article author discusses India’s past missed opportunities in the semiconductor industry and highlights the current government’s efforts, through the India Semiconductor Mission (ISM), to develop a domestic semiconductor ecosystem, attract global investments, and position India as a leading player in the global semiconductor market.

What are the government’s initiatives to support the domestic semiconductor ecosystem?

India Semiconductor Mission (ISM): Launched in December 2021 to boost the domestic industry.

Fiscal Support: Committed unprecedented fiscal incentives to attract global interest.

Regulatory Assistance: Offering regulatory support to facilitate industry growth.

Design Linked Incentive (DLI): Supporting startups through incentives tied to semiconductor design.

Semiconductor Complex Limited (SCL) Revival: Approved modernization of SCL in Chandigarh, turning it into a chip manufacturing unit.

International Collaborations: Signed agreements with the US and Japan for cooperation on semiconductor development, manufacturing, and research.

Micron’s Proposal Approval: Sanctioned Micron’s proposal to set up semiconductor packaging and testing in India.

Fiscal Incentives: Providing competitive fiscal benefits to rival major global economies.

Strengthening the Value Chain: Impetus given across the value chain, from design to final assembly and testing.

Strategic Vision: Demonstrating clear understanding and commitment to the semiconductor industry’s importance.

Why does India need a robust domestic semiconductor ecosystem?

Economic Boost: Enhances economic growth and job creation.

Reduced Dependence: Decreases reliance on semiconductor imports.

Resilience: Protects domestic industries from global supply chain disruptions.

National Security: Safeguards “digital sovereignty” in today’s digital age.

Global Attraction: Draws investments from leading semiconductor companies worldwide.

Strategic Positioning: Places India as a leader in the global semiconductor value chain.

Policy Leverage: Allows India to set its terms in global trade and tech agreements.

Innovation Drive: Encourages research, design, and talent development in tech fields.

Sustainability: Opportunities to pioneer green technologies in manufacturing.

Competitive Edge: India can compete with major economies by offering favorable incentives.

Catalyst for Other Sectors: Powers growth in electronics, computing, and other industries.

Why did India miss the previous opportunities in the field of semiconductors?

The Fairchild Semiconductor fab opportunity was missed in the 60s.

Bureaucratic hurdles deterred global semiconductor companies in the mid-2000s.

India didn’t secure Intel’s expansion in the late 2000s, which went to Vietnam.

Bharat Electronics Ltd (BEL) couldn’t achieve the needed volume or state-of-the-art technology.

India’s VLSI plant in Chandigarh, which began before Taiwan’s industry, shut down after a 1989 fire and wasn’t promptly reopened.

Lack of strategic vision and consistent policy hindered progress.

What should be done?

Consistent Policy Interventions: Address past policy failures and create a clear, strategic vision.

Enhance Infrastructure: Modernize facilities like the Semiconductor Complex Limited in Chandigarh.

Secure Global Collaborations: Deepen ties with countries like the US and Japan for tech cooperation.

Drive Investment: Approve proposals like Micron’s to attract more global semiconductor businesses.

Promote Green Manufacturing: sustainable semiconductor manufacturing achieved through innovations and investments in green technologies, efficient water and resource usage, reduced factory emissions, and contributing to communities and society.

Support Startups: Extend support through initiatives like the Design Linked Incentive (DLI) scheme.

Strengthen the Entire Value Chain: From semiconductor design to final assembly and testing.

Utilize Fiscal Incentives: Provide competitive incentives to attract global and domestic investors.

Engage Global Giants: Show India’s commitment and clarity to entice industry-leading semiconductor companies.