Q. India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India? Mention the salient features of the India Semiconductor Mission.
Introduction:
Semiconductors are the backbone of modern electronics; India’s push to become a manufacturing hub is strategic for economic growth and technological sovereignty.
Challenges Faced by Semiconductor Industry in India
1. High Capital Intensity
- Fab units require $5–10 billion investment
- Long gestation, uncertain returns
2. Technology Dependence
- Reliance on foreign firms for advanced nodes (<10 nm)
- Limited domestic R&D ecosystem
3. Infrastructure Constraints
- Need for ultra-pure water, uninterrupted power
- Logistics & supply chain gaps
4. Skilled Workforce Gap
- Shortage of specialised chip design & fabrication experts
5. Global Competition
- Dominance of Taiwan, South Korea, USA
- Strong subsidies elsewhere (CHIPS Acts)
6. Policy & Execution Risks
- Delays in approvals, land acquisition
- Past fab proposals failed (e.g., Vedanta-Foxconn withdrawal)
7. Supply Chain Ecosystem Weakness
- Lack of ancillary industries (chemicals, gases, equipment)
Salient Features of India Semiconductor Mission (ISM)
1. Institutional Framework
- Nodal agency: India Semiconductor Mission
- Under Ministry of Electronics and Information Technology
2. Financial Incentives
- Outlay ~₹76,000 crore
- Fiscal support up to 50% of project cost
3. Focus Areas
- Semiconductor fabs
- Display fabs
- Compound semiconductors, ATMP/OSAT units
4. Design Ecosystem Promotion
- Design Linked Incentive (DLI) scheme
- Support for startups, fabless companies
5. Infrastructure & Ecosystem Development
- Semiconductor clusters
- Plug-and-play facilities
6. Strategic Partnerships
- Collaboration with global leaders (US, Japan, Taiwan)
7. Talent Development
- Skill development programs in chip design & fabrication
Significance of ISM
- Reduces import dependence (India imports ~$25–30 bn chips annually)
- Strengthens electronics manufacturing (PLI synergy)
- Enhances national security (critical tech autonomy)
Way Forward
- Focus on niche segments (compound semiconductors, packaging)
- Strengthen R&D + academia-industry linkages
- Ensure policy stability & faster clearances
- Build full value chain ecosystem
Conclusion:
While challenges remain, the India Semiconductor Mission provides a strong foundation for building a resilient and globally competitive semiconductor ecosystem.