India recently approved an investment of ₹1.53 lakh crore ($19 billion) across two semiconductor manufacturing projects and one display fab unit as part of its semiconductor mission. This signals major headway in establishing a vibrant domestic electronics system design and manufacturing (ESDM) ecosystem.
India’s Semiconductors Market
Current Status
- Indian semiconductor market valued at $27.2 billion in 2021, dominated by high value chip imports
- Domestic manufacturing limited to assembly, testing, marking and packaging (ATMP) which accounts for nearly 15% of domestic demand
Growth Projections
- Semiconductors market projected to reach $100 billion by 2025 on “Digital India” growth
- High export potential as India uniquely positioned across entire semiconductor value chain from talent to design infrastructure
SWOT Analysis
| Strengths | Weaknesses |
| Rich talent pool for semiconductor design | Absence of silicon wafer Fab infrastructure |
| Vibrant electronics manufacturing ecosystem | Limited R&D in semiconductor material sciences |
| Policy support through fiscal and non-fiscal incentives | Complex global supply dependencies |
| Opportunities | Threats |
| Leverage production incentives under various schemes to catalyze investments | Delays in establishment of semiconductor clusters |
| Develop India as alternative manufacturing site to aid global supply chain resilience | Competition from East Asian countries wooing chip makers |
| Promote ESDM startups under Digital India initiatives | Execution challenges to build ambitious semiconductor capacities |
Approved Semiconductor Fabs
Vedanta-Foxconn Chip Unit (Gujarat)
- $20 billion investment for display and semiconductor fab facility, 100 acre land acquired
- Capacity to produce display panels and semiconductor chips catering to smartphones and electronics
Tata-IMS Chip Fab (Andhra Pradesh)
- $2.4 billion investment in 45nm analog semiconductor chips manufacturing facility
- Would support growing electronics and automotive sectors
IGSS Chip Packaging Unit (Tamil Nadu)
- $403 million foreign direct investment by Indian, Japanese and Thai partners
- Advanced chip packing targeted for applications like 5G and electric vehicles
India’s Semiconductor Mission
Policy Framework
- India Semiconductor Mission (ISM) with $10 billion outlay announced in 2021
- Offers fiscal support of up to 50% of project cost for semiconductor fabs to eligible applicants
Incentives Scheme
- Semiconductors and Display Manufacturing Ecosystem schemes introduced
- Support of up to 50% of project cost offered to approved units
Enabling Infrastructure
- Two semiconductor clusters being developed in Karnataka and Uttar Pradesh for hosting integrated facilities
- Common facility centres, ready built factories, utilities support to be provided
Design-Linked Incentive Initiative
- Design Linked Incentive (DLI) scheme introduced in 2022-23 budget
- Aims to strengthen semiconductor design ecosystem by supporting 100 domestic companies
Workforce Skill Development
- Semiconductor human capital development scheme proposed with outlay of ₹760 crore
- Focuses on specialized training in chip design, fabrication, system level integration etc.
Optimizing the Opportunity
Handholding Startups
- Incubators and mentors needed to nurture semiconductor tech startups from idea to market readiness stage
Fabless Design Industry
- Make in India thrust on fabless chip design industry which outsources manufacturing offshore
- Provide tools, IPs access and flexible design infrastructure leveraging rich talent pool
Equipment Manufacturing Ecosystem
- Promote ancillary industries manufacturing semiconductor equipment components like silicon wafers, gases, wafer processing chemicals etc. through PLI schemes
Export Orientation
- Duty relief schemes for exports can grow India into global semiconductor hub
- Packaging and microcontroller exports offer immense potential
University Collaborations
- Joint R&D projects between industry and academia to drive basic sciences progress, technology innovation
From augmenting financial outlays, infrastructure, clusters, attractive schemes to dedicated centres of excellence, India’s recent semiconductor mission adopts a wholesome approach spanning the entire value chain. Executing initiatives professionally while monitoring progress through industry coordination can fructify aspirations of establishing India as a competitive global semiconductor hub.