View from India: India plans to be key hub for semiconductors
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India is poised to be an attractive investment destination for semiconductor technologies, for a number of reasons.
The pandemic is a reminder of Albert Einstein’s words, “In the midst of every crisis, lies great opportunity.” It’s a known fact that the chip shortage during the pandemic has dampened the spirits of the electronics and automotive industries, among other verticals. It didn’t take long for the government to fast-track measures to uplift the economy. The Indian manufacturing sector is getting a push through Production Linked Incentives (PLI) schemes that offer incentives of over $26bn in 14 key sectors. Over the next five years, the electronics manufacturing sector is expected to see record growth. As reported in the media, the country’s 4G mobile network will start to roll out within a week. The Government-owned service provider BSNL has finalised 2,443 sites for rolling out the service, which will use Indian technology.
In order to promote the semiconductor industry, the Ministry of Electronics & Information Technology (MeitY) had organised SemiconIndia 2022, the country’s first semiconductor conference, last week. Semiconductors play a critical role in the world in more ways than we can imagine and India is no exception. “India’s own consumption of semiconductors is expected to cross $80bn by 2026 and $110bn by 2030. It is our collective aim to establish India as one of the key partners in global semiconductor supply chain. We want to work in this direction based on the principle of high-tech, high quality and high reliability,” said Prime Minister Narendra Modi, virtually inaugurating Semicon India 2022.
The fact that the country is building digital infrastructure to connect over 1.3 billion Indians is itself testimony. The financial inclusion of the unbanked along with the digital payment revolution is well known. Recently, the Unified Payments Interface or UPI that facilitates the transfer of funds between the two bank accounts through a mobile platform made news. As the country’s digital flagship payment platform, media have reported that UPI registered 5.58 billon transactions amounting to Rs 9.83 trillion processed in April 2022. “UPI is the world’s most efficient payment infrastructure today. We are using digital technology to transform lives in all sectors of governance from health and welfare to inclusion and empowerment. We are one of the largest consumers of data per capita. And we continue to grow,” added the PM.
India could well lead the next technology revolution, as 600,000 villages are being connected with broadband. That’s not all. Investments towards developing capabilities in 5G, IoT and clean energy technologies are increasing. These new technologies could be whetted by start-ups for addressing climate change, remote healthcare and other unmet needs. After all, the country is the world’s fastest-growing start-up ecosystem, and new unicorns are coming up every few weeks.
This decade is being described as Techade, a term that brings technology and the decade together. Techade is being driven and energised by thousands of start-ups that could leverage semiconductors, thereby accelerating their growth. “India’s electronics contribution is 2-3 per cent of the global value chain,” said Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology and Skill Development & Entrepreneurship. “A significant growth in electronics, automobile, mobility, and data-led compute will fuel the demand for semiconductors. So by 2026, India’s contribution to the global electronics value chain could be around 10 per cent.” Encouraging factors come in the form of design-linked incentives (DLI) to design, develop and market semiconductors.
The country is investing heavily in skilling and training young Indians for the needs of the 21st century. The semiconductor design talent pool makes up to 20 per cent of the world’s semiconductor design engineers. Almost all of the top 25 semiconductor design companies have their design or R&D centres in our country.
In addition to that, domestic production of semiconductors is getting a boost. India Semiconductor Mission or ISM was formed last year for the development of semiconductors and the display manufacturing ecosystem in the country, with financial support for businesses investing in the sector. “ISM is evaluating companies and could grant approvals to electronic chipmakers in the next six-eight months,” added Ashwini Vaishnaw, Minister of Electronics and Information Technology, Communications and Railways, Government of India.
Led by experts, ISM has many schemes for various parts of the ecosystem such as semiconductor fab, display fab, design, assembly, test, marking and packaging of semiconductors. ISM helps formulate and drive India’s long-term strategies for developing semiconductors and display manufacturing facilities and semiconductor design ecosystem. ISM, which has been set up within Digital India Corporation, will serve as the nodal agency for efficient, coherent and smooth implementation of the schemes.
Whether it is ISM or the Semicon India conference, the government has come forward with many programmes to catalyse the semiconductor ecosystem and position India as a key manufacturing hub of semiconductors in the global scenario.
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