On semiconductors, jugaad won’t do

Source: The post is based on the article “On semiconductors, jugaad won’t do” published in The Indian Express on 30^th September 2023.

Syllabus: GS 3 – Indigenization of Technology, Growth & Development

Relevance: Benefits and challenges associated with setting up semiconductor fabrication unit in India.

News: India is finally building its first semiconductor fabrication unit, which is a significant advancement for the country, promising both economic and geopolitical advantages.

How has India’s industrial policy evolved from the 1970s to the present day?

Unlike the 1970s when people had a negative view of a protected or tariff-controlled economy, today, there is more acceptance of industrial policies that support specific sectors, and protectionism is no longer seen negatively.

Further, India’s economy has grown a lot in recent years. It is now the third-largest economy in the world in purchasing power parity terms, and people in India are consuming more goods and services.

What potential benefits can the new semiconductor fabrication unit bring to the country?

India is a leader in the design of semiconductors, and many Indians and people of Indian origin work for top tech companies around the world. However, India’s manufacturing sector is still not very strong.

Therefore, India’s new semiconductor fab has the potential to help the country make more parts and components, and to create more jobs for skilled workers.

What challenges are associated with establishing a semiconductor fabrication unit in India?

India needs a culture of excellence for semiconductor success. Indian products often fall short in last-mile aspects like packaging, after-sales service, and finishing touches due to “jugaad” instead of innovative solutions.

Further, a lack of international standards has encouraged subpar products and boosted the repair industry’s growth. Additionally, irregular power supply issues have resulted in expensive captive power plant construction.

However, jugaad won’t work for semiconductors as they can’t handle power fluctuations, even the slightest interruption can lead to million-dollar losses.

Hence, semiconductor manufacturing process must be perfect, packaging must meet high standards, and transportation impeccable.

Must Read: Semiconductor manufacturing in India: significance and challenges

What can be the way ahead?

China spent decades moving up the value chain, while India is just beginning. Hence, to succeed, India must link areas of excellence with the broader economy.

Until this integration occurs, new semiconductor fabs will need safeguards from market and government failures, similar to the way ISRO was protected to achieve excellence, including lunar missions.