Boosting the Indian Electronics Industry through the India Semiconductor Mission

Technology, as we know it today, would not be imaginable without semiconductors because they craft the existence of electronic devices and enhance the compactness and power of these devices while also diminishing their price. Semiconductors, also known as integrated circuits (ICs) or microchips are essential components of our day-to-day lives due to their integral role in the fabrication of electronics like phones, computers, automobiles, planes, medical instruments, military weapons, home and kitchen appliances, solar cells, etc. Semiconductors are substances with conductivity and resistivity bordering both conductors and insulators and possess specific electrical properties. They are composed of pure silicon (Si), germanium (Ge), or gallium arsenide. At times they are laced with a minuscule amount of impurities such as arsenic (As), antimony (Sb), phosphorous (P), indium (In), boron (B), or aluminium (Al) to exponentially increase the conductivity.

The electronics industry is an expansive and rapidly growing sector with a multitude of applications. Electronics are acknowledged as a ‘meta-source’ globally and enable an increase in productivity, boost infrastructure development, improve the efficiency of service dispensation, and revolutionise society. The use of semiconductor chips is ubiquitous in all electronic instruments aiding in improvements and evolution in innumerable applications such as communications, computing, health care, military systems, transportation, and clean energy. Semiconductors are vital for sustaining state-of-the-art technology and are forecasted to play an even enhanced role with the development of new technologies like artificial intelligence (AI), 5G, Internet of Things (IoT), smart cars and factories, robotics, etc.

Currently, India imports a staggering $2.38 billion of semiconductor devices from countries like China, Singapore, Hong Kong, Japan, and the United States. Despite being the global leader in semiconductor chip design, India imports 100% of its semiconductors. The Indian semiconductor market was valued at $15 billion in 2020 and is expected to reach $63 billion by 2026. However, in recent times, grave interruptions in the global supply chain system of semiconductors due to the Covid-19 pandemic have led to an acute shortage forcing various companies catering to different sectors to either shut shop or curtail production. The supply of semiconductors was further derailed by the United States-China trade wars. The sheer dependency of India on imports for fulfilling the domestic demand and the crunch in semiconductors imports crippled the manufacturing sector, particularly the mobile and automobile.

A recent report on India’s Trillion Dollar Digital Opportunity, released by Ministry of Electronics & Information Technology (MeitY) stated that India could create up to $1 trillion of economic value from the digital economy by the year 2025 which could support 55-60 million workers. Unlocking this potential would require enablers such as ease of operations, the release of capital flow, supporting digital innovators, strengthening centers of higher education, innovation in new and emerging technologies like AI, and facilitating a booming open-API ecosystem. Since semiconductors manufacturing is critical for meeting the strategic needs of the country the government has thus accorded a high priority to the electronics hardware manufacturing sector and has accelerated the movement towards Make in India, Make for India, and Make for the World. Working on the slogan of ‘Jai Vigyan, Jai Anusandhan’ the government envisions making India autonomous in the semiconductor chips research, development, and manufacturing space. Further, India has proclaimed its aspirations of becoming a key global leader in semiconductor manufacturing by ramping up manufacturing and design development through a slew of new initiatives.

Semiconductor manufacturing is a complex, capital, time, and technology-intensive process of fabricating semiconductor wafers (Fabs). To oversee this, the government set up the India Semiconductor Mission as an institution dedicated to the Semicon India Program. India Semiconductor Mission (ISM) is an independent business division within the Digital India Corporation with financial and administrative freedom to devise and manoeuvre long-term objectives for the development of semiconductors and display manufacturing facilities and the semiconductor design ecosystem in India. ISM will promote national and international collaborations and partnerships and skill development and facilitate Intellectual Property (IP) generation and enable the Transfer of Technologies (ToT).

The government has further approved a production-linked incentive (PLI) scheme of INR 760 billion for the Semicon India Programme for Development of the Semiconductors and Display Manufacturing Ecosystem in India. This grant is aimed at attracting international chip manufacturers to set up semiconductor fabricating units in India with the motive of establishing India as a global semiconductor manufacturing hub. Under this scheme, there are incentives for the companies involved in Silicon Semiconductor Fabs, Display fabs, Compound Semiconductors/ Silicon Photonics/ Sensors (including MEMS) Fabs, Semiconductor Assembly, Testing, Marking, and Packaging (ATMP)/ OSAT, and Semiconductor Design. The following schemes have been introduced under the program:

  • The scheme for setting up Semiconductor Fabs provides fiscal support to applicants: up to 50% of the project cost for 28 nm or lower, up to 40% for 28-45 nm, and up to 30% for above 45-65 nm.
  • The scheme for setting up Display Fabs provides fiscal support of up to 50% of the project cost.
  • The scheme for setting up Compound Semiconductors/Silicon photonics/Sensors Fabs and Semiconductor ATMP/OSAT facilities shall provide financial support of 30% of the total project cost.
  • Further, the Design linked Incentives (DLI) Scheme provides financial incentives, and design infrastructure support for every stage of the development and deployment of semiconductor design. such as electronic components, sub-assemblies, and finished goods. This scheme also provides a ‘Product Design Linked Incentive’ of up to 50% on eligible expenditure and a ‘Deployment Linked Incentive’ of 6% to 4% on net sales.
  • The government also announced a ‘chip to startups’ program wherein 85,000 engineers will be trained to work in the semiconductor ecosystem.

In view of the above-stated goals, MeitY is organizing the maiden Semicon India 2022 Conference in partnership with the industry under the aegis of the India Semiconductor Mission in Bengaluru. Themed ‘Design and manufacture in India, for the World: Making India a “Semiconductor Nation” the three-day conference has been inaugurated by the Honourable Prime Minister Shri Narendra Modi on 29th April 2022.

The conference is an official launchpad for India’s semiconductor strategy and policy which envisions making India a leader in semiconductors and electronics innovation, design, and manufacturing. It draws leaders from the industry, academia, research institutions, and startups to one table and exhibits the collaborative efforts of the government in fuelling the semiconductor and electronics manufacturing ambitions of India. The conference witnesses the participation of industry stalwarts and academicians from around the globe. The Ministry aims to forge coalitions in the field of semiconductors and sign several Memorandums of Understanding (MoUs).

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