APPROACH
The Introduction: Talk about need for semiconductor manufacturing ecosystem in India
The Body
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- Highlight the challenges in India’s semiconductor industry
- Briefly introduce the India Semiconductor Mission
- Highlight its salient features and progress made under the Mission
The Way Forward: Give ways to overcome the challenges to create a thriving ecosystem
The Introduction:
Semiconductors are the “brain” of modern technologies, from smartphones, automobiles and medical devices to defence systems and AI infrastructure. India is heavily reliant on imports for chips, posing risks to national security and technological autonomy. This calls for establishing a semiconductor manufacturing ecosystem in India.
The Body
Challenges in India’s Semiconductor Industry
1. High capital requirement: Chip manufacturing is extremely capital-intensive and also the commercialisation of fab facilities takes time which is an initial loss for any investor.
2. Technological challenges: India is building an end-to-end ecosystem from scratch. While design and packaging are growing, sophisticated fabrication and microprocessor designing is a challenge.
3. Talent shortage: While 20% of global semiconductor design engineers are Indians still semiconductor firms struggle to find skilled talent, especially shopfloor manpower. To add to that, the slow adoption of Very Large Scale Integration (VLSI) courses in ITIs is also a dampener.
4. Infrastructure and logistics challenges: Chip fabs require ultra-clean environments, stable power and quick machinery imports. Any delay impacts setup timelines and costs.
5. Global competition: Countries like the US, Taiwan, South Korea and China possess mature ecosystems. India needs to sustain momentum to keep foreign manufacturers interested.
India Semiconductor Mission
The India Semiconductor Mission (ISM) (Rs 76,000 crore outlay) aims to build a strong semiconductor and display ecosystem, positioning India as a global hub for electronics manufacturing and design, while serving as the nodal agency for the efficient and seamless implementation of semiconductor and display schemes.
Salient Features
1. Substantial fiscal support: ISM provides up to 50% capital subsidy for fabrication units, display fabs, compound semiconductors and TMP (Assembly, Testing, Marking, and Packaging)/ OSAT (Outsourced Semiconductor Assembly and Testing) facilities.
2. Design Linked Incentive (DLI) Scheme: It provides financial incentives and design infrastructure support to domestic companies, startups and MSMEs for semiconductor and chip design.
3. Project approvals: Till August 2025, the ISM has approved 10 semiconductor units across six states, with cumulative commitments of Rs 1.6 lakh crore, including joint ventures with global firms like Micron, TSMC and Foxconn etc.
4. First “Made-in-India” Chip: India expects to produce its first fully packaged chip by December 2025 as per Ministry of Electronics and Information Technology (MeITY).
5. SEMICON India: Comprehensive government program to develop India’s semiconductor and display manufacturing ecosystem
6. Global partnerships: Companies like Intel, NVidia and Lockheed Martin are investing under ISM which reflects rising investor confidence.
7. Regional industry hubs: Gujarat has been declared a semiconductor hub. Tata Electronics is setting up India’s first indigenous chip assembly and test unit in Assam, promising significant employment.
The Way Forward
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- Attract more private R & D: Phase 2 of ISM can be planned to incentivise private sector R & D in the semiconductor ecosystem.
- Expand talent supply: Promote VLSI and semiconductor education in universities, establish chip design labs and incentivize training at ITI levels.
- Ensure sustainability and security: Embed green practices into semiconductor parks. Also, treat fabs as ‘Critical Infrastructure’ with strong security protocols.
- Encourage IP development: Link incentives to indigenous chip design success and support local startups in design.
- Stable policy: Ensure policy continuity, land and utilities support and fast-track clearances. Promote state-level ambition into a coordinated national ecosystem.
