India’s Semiconductor Industry

Why in the News?

India has geared up to set up its first ever semiconductor fabrication unit and is poised for a vibrant chip industry in the next 3-4 years with an aim to grow the manufacturing ecosystem in India.

India’s Manufacturing ecosystem:

1. Presently, 99% of mobile phones for domestic use are made in India, which is in stark contrast to 99% of phones imported for domestic use a decade ago.
2. India ranks second in mobile phone manufacturing and ranks third in the exports, with more than 200 mobile manufacturing units in India.
3. A fifth of all global semiconductor design is done in India. 
4. The Electronic Manufacturing sector has grown from $30 billion to over $100 billion.
5. Domestic semiconductor consumption is expected to reach $80 billion by 2026.

India’s Semiconductor Mission:

1. 1. Under the Ministry of Electronics and Information Technology.
   2. To make India as a global hub for electronics, chip manufacturing and design.
   3. Launched as part of ‘Make in India’ Initiative.
   4. The mission proposes a $10 billion incentive plan with a fiscal outlay of up to 50% of a project’s cost to display and semiconductor fabricators.
   5. Four Schemes under the Mission
      1. Semiconductor Fab Scheme – A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.
      2. Display Fab Scheme - A fiscal support of up to % of project cost on projects appraised by the Expenditure Finance Committee.
      3. Semiconductor and Semiconductor ATMP - fiscal support of 50% of capital expenditure to Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor Packaging (ATMP / OSAT) units.
      4. Design Linked Incentive Scheme - offer financial incentives and design infrastructure support across various stages of development and deployment of semiconductor design(s) for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design(s) over a period of 5 years.

Other steps taken by the Govt:

1. Fiscal support of 50% of project cost for Setting up of Semiconductor Fabs and Display Fabs in India.
   1. Aims to set up at least two greenfield Semiconductor Fabs and two Display Fabs as High-Tech Clusters with requisite infrastructure in terms of land, semiconductor grade water, high quality power, logistics and research ecosystem.
2. Design Linked Incentive (DLI) Scheme to provide 50% of eligible expenditure and product deployment linked incentive of 6% - 4% on net sales for five years, for domestic companies of semiconductor design.
3. Efforts are taken for modernization and commercialization of Semi-conductor Laboratory (SCL), Mohali.

Need to create a culture of excellence:

1. Power fluctuations even as minutest interruptions can lead to a total batch loss of chips worth millions of dollars.
2. The packaging will need to be of Japanese quality, and the transportation.
3. The new fabs will need to be protected from the vagaries of market and government failures until the bridge between islands of excellence and the rest of the economy is built.