Industry leaders seek budgetary boost to fuel India's semiconductor ambitions

Union Finance Minister Nirmala Sitharaman will present her eighth consecutive Budget 2025 on Saturday, February 1.

Industry leaders are urging the government to increase budgetary support for the electronics and semiconductor sector in the Budget 2025 to be presented by finance minister Nirmala Sitharaman on February 1.

Ajai Chowdhry, co-founder of HCL and chairman of EPIC Foundation, stressed the critical need for "securing strategic autonomy" given the evolving global landscape, particularly in light of US technology export restrictions.

"Due to the new unipolar world and US sanctions, the need is to move urgently to secure strategic autonomy by building our own IP/products," Chowdhry said.

He proposed a dedicated budget allocation of Rs 44,000 crore for the "Product Nation" initiative, with a significant portion earmarked for semiconductor and system product development.

The India Electronics and Semiconductor Association (IESA) also submitted its Budget recommendations.

It has called for a substantial increase in the production-linked incentive (PLI) scheme for semiconductors, urging an additional allocation of $20 billion over the next five years.

IESA president Ashok Chandak said, "India’s semiconductor sector is at a pivotal growth stage, driven by government initiatives, strategic collaborations, and a robust domestic market."

The body also emphasised the need to increase local value addition in electronics manufacturing.

IESA recommended a dedicated allocation of Rs 10,000 crore for targeted R&D initiatives, focusing on industry-academia collaborations and high-priority product development.

Vivek Tyagi, managing director, Analog Devices India, said, "The ongoing PLI schemes have laid the foundation for a robust manufacturing ecosystem, however, as India reaches a pivotal stage in its journey toward becoming a global manufacturing hub, we need to further enhance these initiatives towards an end-to-end supply chain ecosystem.

"The focus must now shift to strengthening these policies and placing greater emphasis on promoting 'Design led manufacturing’ schemes to enhance the operations within our borders," Tyagi added.

Ramendra Verma, partner, Grant Thornton Bharat, said, "Given the limited allocation, we are still far away from seeing approval for Silicon fabs."

Verma urged the government to enhance financial incentives such as extending the PLI scheme, focus on R&D by allocating dedicated funds and invest in skilling and training programmes as well as infrastructure development.

"Develop critical semiconductor infrastructure such as fabrication plants (fabs), assembly, testing, marking, and packaging facilities, and outsourced semiconductor assembly and test  units," he said.