[Answered] Discuss the evolution of the semiconductor industry in India. What were the key missed opportunities and how have they shaped the current state of the industry?

Introduction: Briefly describe the evolution of the semiconductor industry in India.

Body: What are the key hurdles in the mission

Way forward: Features highlighting renewed focus and efforts to shape the current state of the industry.

The semiconductor industry in India has seen significant growth since its early stages in the 1960s with the establishment of public sector units like Semiconductor Complex Limited (SCL) and Bharat Electronics Limited (BEL) With economic liberalization in the 1990s, the focus shifted to semiconductor design and R&D, attracting global players to set up design centers. The “Make in India” campaign further boosted electronics manufacturing, and the National Electronics Policy (NEP) aimed to create a $400 billion industry by 2025, with a focus on semiconductor manufacturing.

What are the hurdles in the semiconductor manufacturing industry?

  • Regulatory and bureaucratic hurdles: Although the Indian government has taken steps to encourage the semiconductor industry, such as the National Electronics Policy (NEP), ongoing policy changes, red-tapism in bureaucracy, and unpredictability in the regulatory environment might hinder the industry’s expansion.
  • Global competition: India is up against fierce competition from other well-known semiconductor hubs including the United States, Taiwan, South Korea, and China. It is difficult for India to capture a sizable portion of the market because these nations have well-developed ecosystems and infrastructure.
  • Infrastructure and Technology Constraints: Despite the early good start of PSU in semiconductor manufacturing, BEL & other companies were not able to achieve the desired result due to a lack of competitive spirit,  nor did they have the state-of-the-art technology to be a leader in the industry.
  • Lack of strategic vision: From missing out on the Fairchild Semiconductor fab manufacturing plant to shutting down Semiconductor Complex Limited in Chandigarh there was a lack of strategic vision & policy failure which prevented India from keeping up with the leading semiconductor nation.
  • Lack of Semiconductor Manufacturing: India remains heavily dependent on imports for semiconductor and electronic products. This has hampered India’s ability to become self-reliant and increased dependency on other nations.

Way forward:

  • Strategic vision: The present government has recognized the economic and geopolitical significance of this industry and is determined to make remarkable progress in Indian semiconductor design and manufacturing through changes forced by rapidly advancing technologies, evolving supply chains, and a shifting geopolitical landscape.
  • India Semiconductor Mission (ISM): The Indian government’s recognition of the need for a strong domestic semiconductor ecosystem for supporting economic growth, protecting domestic industry from external disturbances, and maintaining national security is reflected in the ISM.
  • Support from Private industry: The support from India Inc. can be seen in the Vedanta group announcement to set up a semiconductor fabrication unit, a display fabrication unit, and a semiconductor assembling-cum-testing facility in Ahmedabad.
  • Global Cooperation: To cooperate on semiconductor development, production, research, design, and talent development, the government has also struck agreements with the US and Japan. An important first step in a series of several international investments in India will be the acceptance of Micron’s proposal to establish semiconductor packaging and testing facilities there.
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