(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)
India is set to become a hub for the semiconductor industry, provided it addresses certain challenges that need to be identified and addressed.
If one goes by what Prime Minister Narendra Modi said while inaugurating SEMICON 2024 on September 11 this year, India has already attracted a huge investment in a very short time in this sector. PM Modi said that India is creating a semiconductor workforce of 85,000 technicians, engineers and R&D experts.
With India’s electronics sector now valued at over $150 billion, Modi outlined a goal to expand it to $500 billion and create 6 million jobs by the end of the decade. This growth is expected to benefit the semiconductor sector directly.
Modi’s recent visit to Singapore also boosted India’s efforts to become a key player in the semiconductor sector. During this visit, India and Singapore signed multiple agreements on semiconductor cluster development and talent cultivation in semiconductor design and manufacturing.
As India chases the semiconductor manufacturing pie, science comes full circle for the country where Acharya Jagadish Chandra Bose created the world’s first semiconductor device, the iconic Cat’s Whisker, in 1901, says an interesting report in ‘Science India’, a journal published by Vijnan Bharati, an organisation inspired by the Rashtriya Swayamsevak Sangh (RSS), which works in science and technology.
Initiatives by Indian Government
According to an India Brand Equity Foundation Report, “In 2022, the Indian semiconductor market was valued at $26.3 billion and is projected to expand at a CAGR of 26.3% to $271.9 billion by 2032.”
Two key government programs are crucial in tapping this potential: the India Semiconductor Mission (ISM) and SEMICON India.
India Semiconductor Mission (ISM) is a specialized and independent Business Division within the Digital India Corporation. Its mandate is to build a vibrant semiconductor and display ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design.
According to the official statement about this mission, “Led by global experts of the Semiconductor and display ecosystem the mission aims to serve as a focal point for the comprehensive, coherent, efficient, and smooth deployment of the Program for Development of Semiconductor and Display Ecosystem in consultation with the Government ministries / departments / agencies, industry, and academia.”
The comprehensive SEMICON India programme was approved by the union cabinet in 2021 with a financial outlay of Rs 76,000 crore for the development of a sustainable semiconductor and display ecosystem.
SEMICON India Program aims to provide attractive incentive support to companies / consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT) and Semiconductor Design.
In September 2024, the U.S. State Department announced a partnership with India’s Semiconductor Mission to explore opportunities for strengthening the global semiconductor supply chain under the ITSI Fund, part of the CHIPS Act of 2022. This collaboration will involve a comprehensive assessment of India’s semiconductor infrastructure and regulatory framework, guiding future joint initiatives. The insights will guide future joint initiatives to boost this critical sector.
The International Technology Security and Innovation (ITSI) Fund, appropriated under the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022, provides the US Department of State with $500 million — $100 million per year over five years, starting in Fiscal Year 2023 — to promote the development and adoption of secure and trustworthy telecommunications networks and ensure semiconductor supply chain security and diversification. The ITSI Fund is distinct from other funding under the same Act.
Challenges
As India gains momentum in the semiconductor field, caution is warranted. Dr. Sushil Kumar and Prof. Venu Gopal Achanta noted in their paper in 'Science India', “One notable area where India may lead is in carbon neutrality. Semiconductor process facilities generate toxic chemicals, gases and hazardous waste which require safe disposal. Further, the majority of wafer fabrication facilities around the world are operational without much thought of sustainability. As India is embarking on its long journey, through its semiconductor mission, it can also lead the way by keeping in sight the carbon neutral targets promised by the government.
Meeting the power requirements through renewable energy sources, safe disposal of toxic waste, use of recycled water and chemicals, and use of green materials in semiconductor processing could help reduce the carbon footprint of these facilities. If India creates silicon growth and chip fabrication facilities having low carbon footprint and less capital-intensive technologies (as ISRO has done in space technology), it can show the world the viability of sustainable semiconductor manufacturing. This can also encourage the rest of the world to move.”
Currently, India competes with South Korea, Taiwan, and China to become a semiconductor manufacturing hub. Although India has gained momentum, achieving leadership in this sector requires close coordination between state and central governments, which may be challenging given the current political landscape.
Earlier Sanghnomics columns can be read here.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
