India has set its sights
on becoming a global leader in electronics manufacturing and semiconductor
innovation. A key milestone in this journey was the inauguration of the
first-ever Semicon India 2022 Conference in Bengaluru, organized by the
Ministry of Electronics & Information Technology under the India
Semiconductor Mission (ISM). This event underscores India's commitment to
catalyzing its semiconductor ecosystem and establishing itself as a dominant
player in the global electronics industry.
Semicon India 2022:
Catalysing a Semiconductor Revolution
The theme of Semicon
India 2022, "Catalysing India’s Semiconductor Ecosystem," captures
the nation's resolve to nurture a thriving semiconductor landscape. This
conference is a crucial part of the broader strategy envisioned by the Prime
Minister to transform India into a global hub for electronics and semiconductor
manufacturing. As India aims to position itself at the forefront of this
industry, the conference marked a significant step towards realizing this
vision.
Understanding
Semiconductors: The Backbone of Modern Electronics
Semiconductors are
materials that possess electrical conductivity between a conductor and an
insulator. These crystalline solids form the foundation of modern electronic
devices, including diodes, transistors, and integrated circuits (ICs). Their
compactness, reliability, power efficiency, and cost-effectiveness make
semiconductors indispensable in various applications, from power devices and
optical sensors to light emitters like solid-state lasers.
India Semiconductor
Mission (ISM): Charting the Future
Launched in 2021 with a
financial outlay of ₹76,000 crores, the India Semiconductor Mission (ISM) is a
comprehensive initiative by the Ministry of Electronics and IT (MeitY) aimed at
developing a sustainable semiconductor and display ecosystem in the country.
ISM provides financial support to companies investing in these areas, with
several key components forming the backbone of this mission:
- Semiconductor Fabs:
This scheme offers fiscal support to eligible applicants for setting up
semiconductor wafer fabrication facilities, attracting significant
investments in this sector.
- Display Fabs:
Like the semiconductor fabs scheme, this initiative supports the
establishment of TFT LCD and AMOLED display fabrication facilities in
India.
- Compound Semiconductors and ATMP/OSAT
Facilities: Offering 30% fiscal support for
capital expenditure, this scheme focuses on setting up compound
semiconductors, silicon photonics, sensors fabs, and semiconductor
assembly, testing, marking, and packaging (ATMP) or outsourced
semiconductor assembly and test (OSAT) facilities.
- Design Linked Incentive (DLI) Scheme:
This scheme provides financial incentives and design infrastructure
support across various stages of semiconductor design, promoting the
development of ICs, chipsets, SoCs, systems, and semiconductor-linked
designs.
The Vision and Strategic
Importance of ISM
The vision of ISM is to
create a vibrant semiconductor and display design ecosystem, positioning India
as a global leader in electronics manufacturing and innovation. By organizing
efforts to promote the semiconductor and display industries, ISM aims to develop
long-term strategies for building semiconductor manufacturing facilities and
design ecosystems in India. The mission also facilitates the adoption of secure
semiconductors and display supply chains, promotes indigenous IP generation,
and fosters collaborations with national and international agencies for
research and skill development.
Why Promoting the
Semiconductor Industry is Crucial
Semiconductors are at the
heart of modern economies. In today's technology-driven world, microchips, also
known as Integrated Circuits (ICs), cannot be overstated. These chips,
primarily made of silicon and germanium, are essential for the functioning of
smartphones, radios, TVs, laptops, computers, and even advanced medical
equipment. With the rise of electric vehicles (e-vehicles), the demand for
semiconductors is expected to surge, making this industry an attractive avenue
for investment.
India's semiconductor
consumption is projected to surpass USD 80 billion by 2026 and USD 110 billion
by 2030. However, the global semiconductor industry is currently dominated by
countries like the United States, Taiwan, South Korea, Japan, and the Netherlands,
with Germany emerging as a key player. Given the rapid growth of the
semiconductor market, India must establish itself early in this domain.
Government Initiatives to
Boost the Semiconductor Sector
To support the
semiconductor industry in India, the government has launched several
initiatives:
- Semi-conductor Laboratory (SCL):
MeitY is taking steps to modernize and commercialize the Semi-conductor
Laboratory.
- Support for Compound Semiconductors:
The government provides 30% fiscal support of capital expenditure for
approved compound semiconductor units.
- Production Linked Incentives (PLI):
With an approved incentive support of ₹55,392 crores, the PLI scheme aims
to boost large-scale electronics manufacturing, IT hardware, and
electronics manufacturing clusters in India.
The Road Ahead: Building
a Competitive Semiconductor Ecosystem
Semiconductors and
displays are the foundation of modern electronics, driving the next phase of
digital transformation under Industry 4.0. To capitalize on this opportunity,
India could leverage its Public Sector Enterprises (PSEs) like Bharat
Electronics Ltd or Hindustan Aeronautics Ltd to establish a semiconductor fab
foundry in collaboration with a global major.
While the dream of
swadeshi semiconductors may be challenging, India should aim to become a key
player in a trusted, plurilateral semiconductor ecosystem. Favorable trade
policies will be crucial in building such an ecosystem, ensuring India's
competitive edge in the global semiconductor industry.
Modified Programme for
Semiconductors and Display Fab Ecosystem
In alignment with the
vision of Aatmanirbhar Bharat and positioning India as the global hub for
Electronics System Design and Manufacturing (ESDM), the Government of India has
approved a comprehensive program with an outlay of ₹76,000 crores. The program
includes various schemes to attract investments in semiconductor and display
manufacturing. The Union Cabinet has approved modifications to this program,
including:
- 50% Fiscal Support for Semiconductor
and Display Fabs: The revised scheme provides
fiscal support of 50% of the project cost on a pari-passu basis for all
technology nodes under the schemes for setting up semiconductor and
display fabs in India.
- Support for Compound Semiconductors
and ATMP/OSAT Facilities: The scheme extends
fiscal support of 50% of capital expenditure on a pari-passu basis for
setting up compound semiconductors, silicon photonics, sensors fabs, and
ATMP/OSAT facilities in India, including discrete semiconductor fabs.
- Incentives for Semiconductor Design
Companies: The Design Linked Incentive (DLI)
Scheme will offer product design-linked incentives of up to 50% of
eligible expenditure and product deployment-linked incentives of 6% to 4%
on net sales for five years, supporting up to 100 domestic semiconductor
design companies.
Modernizing the
Semi-conductor Laboratory (SCL)
The Union Cabinet has
also approved steps for the modernization and commercialization of the
Semi-conductor Laboratory (SCL) in Mohali. MeitY will explore the possibility
of a joint venture with a commercial fab partner to modernize this brownfield
fab facility.
India Semiconductor
Mission: Driving Long-Term Strategies
The India Semiconductor
Mission will be led by global experts in the semiconductor and display
industry. This specialized and independent mission will act as the nodal agency
for the efficient and smooth implementation of schemes for setting up semiconductor
and display fabs, ensuring India’s emergence as a global hub for electronics
manufacturing and design.
As India takes these bold steps, the future of its semiconductor industry looks promising, with the potential to become a cornerstone of the nation's economic and technological growth.