India must emerge as the next major semiconductor chip designer and manufacturer in the world given its strategic importance for the nation. I personally vouch for an independent semiconductor industry in India, free from political and bureaucratic restrictions, given the knowledge-based economy of the country and its huge market base.
The Indian semiconductor industry, growing at 10% annually, is set to be worth $ 33 billion by 2025, according to the Indian Electronics & Semiconductor Association.
India is strategically building an electronics system design manufacturing industry. Currently nearly 3000 chips are designed every year in India, with more than 30,000 engineers working on different aspects of chip design and verification.
Thanks to the Government of India initiatives to boost the economy, like the Make in India program, 100% foreign direct investment (FDI), and support of subsidies and incentives, which are strategically paramount for job creation and skill development, semiconductor chip design and manufacturing in India should greatly benefit with investment proposals.
Focus must also be made on small- and medium-enterprises to take up chip manufacturing, as is the case in China, Taiwan, and Thailand. This will certainly, make India self-reliant as well as self-sufficient in semiconductor chip production, and will fill the gap in the country’s electronics production capabilities.
It is encouraging to note that India has signed an MoU with the Singapore Semiconductor Industry Association to develop trade and technical collaboration in electronics and semiconductor industries. Companies are now recognizing the potential of the electronics sector in India and investing heavily in manufacturing.
For example, Panasonic Corp. is developing a new plant in Haryana, which will produce refrigerators and build a R&D centre for appliances for the Indian market. India is an ideal location for global R&D. The Semiconductor Complex in Chandigarh is a strategic fabrication facility. The Gallium Arsenide (GaAs) fabrication facility in Hyderabad is important from the defence R&D point of view. Bangalore is emerging as a hub for innovating start-ups in the semiconductor field.
Moreover, the Indian government is developing electronics manufacturing clusters across the country with world-class infrastructure. For example, it has received applications from IBM and ST Microelectronics to establish semiconductor wafer fabrication units in Gujarat and Noida.
However, there is an urgent need to meet the import challenges since most of the electronic components come from abroad. The growth of digitalization in India is increasing consumer demand for electronics, and hence, the need for domestic electronic production capabilities. However, from the country’s strategic point of view, this bulk of consumer demand must not be met through imports alone. Hence, the case for a self-reliant indigenous semiconductor manufacturing industry for India.
A good degree of freedom must be given to the industry given that India has several strategic technology development activities. Since the semiconductor fabrication industry is intellectual capital intensive, India has a great strategic advantage and competitive edge, given its large educated youth population and a huge number of engineers it produces annually.
It is a capital-intensive industry and so requires risk-taking for entrepreneurs and venture capitalists. It is hence, a strategic necessity for India, on multiple levels, to have an independent semiconductor industry given its “to be superpower status” in the world today.
— Dr. Milind Thomas Themalil, Associate Professor at JK Lakshmipat University, Jaipur.