The Cabinet last week approved three major semiconductor projects, with an estimated investment of Rs 1.26 lakh crore to be established in Gujarat and Assam. The move comes when India is poised to expand its role in global semiconductor value chains, according to a report by the Information Technology and Innovation Foundation (ITIF).
The report, titled “Assessing India’s Readiness to Assume a Greater Role in Global Semiconductor Value Chains,” underscores India’s potential to significantly enhance its presence in the semiconductor industry. With a large and growing consumer and business marketplace, coupled with strengths in electronics production and global supply chain rebalancing, the report urges India to seize the opportunity to bolster its position in global semiconductor value chains.
According to the ITIF report, India could establish up to five semiconductor assembly, test, and packaging (ATP) facilities over the next five years, while attracting fabs producing legacy semiconductors at 28 nm or above. This expansion would leverage India’s extensive experience in semiconductor design, where it currently accounts for 20 per cent of the world’s integrated circuit (IC) design workforce, employing over 125,000 workers.
However, the semiconductor industry faces a global shortage of talent. While India graduates over 800,000 engineers annually, only a small fraction are deemed industry-ready upon graduation. The report emphasises the need for better courses, training, and preparedness to bridge this gap and capitalise on India’s pool of engineering talent. So, the industry believes that with major chip companies expressing interest in India and its supportive policies, the nation is poised to enhance its technical capabilities and expand its talent pool.
The India Perspective
Commenting on the report and the semiconductor ecosystem, Sanjay Gupta, chairperson of the India Electronics and Semiconductor Association (IESA), while speaking to News18, highlighted the thriving nature of the ecosystem within the country.
Gupta noted that various stakeholders, including electronic companies, semiconductor firms, and software companies, are actively engaging with the ecosystem. He emphasised that India’s semiconductor manufacturing encompasses a wide range of industries, including chemical and gas companies, underscoring the comprehensive nature of the ecosystem.
Gupta, pointing to India’s emergence as a viable alternative in the global semiconductor value chain, said: “While countries like Singapore, Korea, Hong Kong, Japan, and Malaysia excel in logistics and infrastructure, India offers unique advantages, including its demographic profile and scalability.”
With India projected to remain the youngest country in the world for the next four decades, coupled with its ability to scale, Gupta asserted that India is poised to become a major player in the semiconductor industry. Meanwhile, addressing the requirements for semiconductor manufacturing, Gupta outlined 10 critical factors, including uninterrupted electricity and water supply, robust logistics infrastructure, access to talent, and government support for clearances and visas.
He also highlighted India’s track record of maintaining stable policies which has instilled trust among global investors. He pointed out the fact that leadership within the government is also one of the key factors that contributes to the stability of policies, thereby attracting major investments.
While talking about the report, he further underscored the significance of India’s domestic market in driving semiconductor consumption. He pointed out that while other countries may heavily rely on exports, India’s economy is poised to thrive on domestic consumption. With projections indicating substantial growth in semiconductor consumption within the country, he emphasised the potential for India to establish a self-sustaining semiconductor industry catering to local needs. This, he argued, would not only reduce dependency on imports but also contribute to the stability of the Indian economy by mitigating fiscal deficits and currency devaluation risks.
Echoing Gupta’s thoughts, Ashok Chandak, president of IESA, also said: “Given its rapidly expanding domestic market, a well-developed design ecosystem, supportive government policies, and concerted industry collaboration to tap global markets, the present juncture presents a unique opportunity for the establishment of semiconductor manufacturing in India. The report underscores India’s tremendous progress towards becoming a prime destination for electronics and semiconductor manufacturing, capitalizing on its robust semiconductor design ecosystem.”
However, the report also aims to inform government efforts in deepening commercial ties between the US and India in the semiconductor sector while highlighting the fact that in recent years companies have turned to a “China-plus-one” or “China-plus-two” strategy in order to bolster their supply chain resilience.
John Neuffer, president, and CEO of Semiconductor Industry Association (SIA) said: “This is an exciting moment in history for the semiconductor industry and for strategic cooperation between the US and India. India is already an important link in the global semiconductor supply chain and has the opportunity to expand its role in our sector. While global competition for semiconductor investment is fierce, India’s value proposition is strong.”
Overall it is understood that with the government’s support and industry collaboration, India is well-positioned to strengthen its foothold in the global semiconductor value chains, contributing to the country’s technological advancement and economic growth.
