More needs to be done to make India self-reliant in Semiconductor production

Contact Counsellor

More needs to be done to make India self-reliant in Semiconductor production

  • Semiconductors are at the core of fourth industrial revolution technologies.
  • While the government has already provided incentives for manufacturing, more needs to be done to make India self-reliant.


  • The pandemic has brought to attention the fragility of the global supply chain of semiconductor manufacturing.
  • The situation is exacerbated by the overdependence of the world on East Asia for fab manufacturing, the rising price of silicon, and the China-U.S. trade war.
  • Countries are trying to safeguard their interests by introducing attractive packages to attract more chip manufacturing.
  • The U.S. has announced a $50 billion package to create foundries there.


  • Any class of crystalline solids intermediate in electrical conductivity between a conductor and an insulator.
  • Semiconductors are employed in the manufacture of various kinds of electronic devices, including diodes, transistors, and integrated circuits.
  • Such devices have found wide application because of their compactness, reliability, power efficiency, and low cost.
  • As discrete components, they have found use in power devices, optical sensors, and light emitters, including solid-state lasers.

Initiatives by the Indian government

  • India has approved a $10 billion package to incentivise the manufacturing of semiconductors in the country.
  • The government has drawn out a list of incentives to get leading international manufacturers to set up their manufacturing unit in India either by themselves or with the help of a local partner.
  • This is a welcome first step, considering the current geopolitical dynamics and importance of semiconductors.

Demand for semiconductor

  • The total demand for semiconductors stands at $24 billion.
  • This is expected to grow to $80-90 billion by 2030.
  • However, this demand is for different categories of semiconductors used in various electronic devices and applications.

Fab clustering

  • It will build on India’s strength in design.
  • India has the largest number of chip designers outside of the U.S. who are working on state-of-the-art systems and technologies.
  • The strong expertise of our semiconductor design professionals in EDA (Electronic Design Automation) tools provides solid ground to move towards manufacturing.
  • It would provide fiscal support of up to 50% of the project cost for setting up semiconductor and display fabrication units.
  • The Union government will work with the States to set up high-tech clusters with the required infrastructure such as land and semiconductor-grade water.
  • Key semiconductor supply chains and related businesses are in one place to create backward and forward linkages in it.
  • It would play a key role in creating an ecosystem for the semiconductor industry.
  • It needs to ensure high-quality infrastructure along with uninterrupted power availability


  • Strategic Importance: In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure.
  • Employment: It will also create highly skilled employment opportunities to harness the demographic dividend of the country.
  • Multiplier Effect: Development of the semiconductor and display ecosystem will have a multiplier effect across different sectors of the economy with deeper integration to the global value chain.
  • Boost to Electronic Sector: The program will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design.
  • Self Reliance: This shall pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance.

What needs to be done

  • Enter into an agreement with the consumers of semiconductors like automotive manufacturers to ensure that whatever is produced is consumed.
  • Established fab companies should come on their own as they bring with them their demand base.
  • Similar work needs to be done to develop raw material supply capabilities.
  • The India Electronics and Semiconductor Association is exploring the opportunity to start supplying processed raw materials like minerals and gases to the fab and ATMP (Assembly, Testing, Marking, and Packaging) industry.
  • It will expand opportunities for semiconductor equipment, spares, and the service industry.
  • A conducive environment needs to be created for women to work night shifts along with zero labour disputes.
  • Focus on emerging technologies like LiDAR and Phased Array in which incumbents do not have a disproportionate advantage and the entry barrier is low.

Way forward

  • Incentivising more FDI in electronics to deepen supply chains through incentive schemes
  • Focus on encouraging Indian manufacturers and start-ups to enter and master complex R&D and manufacturing verticals.
  • Ensure Intellectual Property is created and owned by Indian companies.


  • The semiconductor industry is changing fast as new-age technologies require innovation at the design, material, and process levels.
  • We must encourage Indian engineers to set up their design start-ups with government grants and tax incentives.
  • Premier research institutions should work aggressively on R&D in chip designing and manufacturing.
  • By investing in new cutting-edge technologies, India can ensure that it becomes atmanirbhar.