Why Is Indian Government Focussing On Semiconductor Production In India? | Explained

Semiconductor News Today: The increased focus of the Indian government on the sector is likely due to an exponential rise in the demand for electronic devices and a paucity of the manufacturers of these chips in the world.

New Delhi: Speaking at the launch of a conference in Bangaluru on Friday, Prime Minister Narendra Modi laid emphasis on the production of semiconductors in India. Earlier this week in San Francisco, Finance Minister Nirmala Sitharaman invited semiconductor manufacturers from the US to invest in India. Sitharaman talked about India’s commitment to being a ‘reliable player’ in the value chain of semiconductors.

In 2021, the Modi-led government had approved a Rs 76,000-crore India Semiconductor Mission (ISM) to showcase its commitment to establishing a stronghold in the $533 billion semiconductor market. The mission was launched under the aegis of the Ministry of Electronics and IT (MeitY). Under the mission, the industry and academia are being asked to coordinate and create a pool of 85,000 semiconductor professionals that can meet the requirements at all levels of the industry. It is aimed at establishing India as a manufacturing leader in these chips. ‘

Modi’s Six Reasons For India Being An Attractive Investment Place

The official Twitter handle of the PMO, “I see six reasons for India being an attractive investment destination for Semi-conductor technologies. First, we are building the digital infrastructure to connect over 1.3 billion Indians: PM
@narendramodi.”

I see six reasons for India being an attractive investment destination for Semi-conductor technologies.

First, we are building the digital infrastructure to connect over 1.3 billion Indians: PM @narendramodi

— PMO India (@PMOIndia) April 29, 2022

The thread goes on to state the six key reasons. Largely these include:

1. Focus on Digital Infrastructure to connect the whole of India
2. Investment in 5G, IoT and Green energy initiatives
3. Robust economic growth and emerging start-ups in India
4. Reforms in ease of doing business in India
5. Focus on skill development
6. Reforms in India’s manufacturing sector

Why is the government focussing on the semiconductor industry so much?

Semiconductor, to say the least, is the heart of modern economics. In today’s world of technology, when almost everything revolves around electronic gadgets, one cannot overstate the importance these microchips hold.

Also known as Integrated Circuits (ICs), these chips are primarily made out of silicon and germanium. Without these chips, there would be no smartphones, radios, TVs, laptops, computers or even advanced medical equipment. They are used to fabricate electronic devices. Also, with the emergence of e-vehicles, the demand for semiconductors is expected to see a big boom.

The Covid-19 pandemic has shown that the demand for electronic gadgets will only go uphill from here. In all this, the industry seems to be an attractive place to make early inroads into. PM Modi said that India’s own consumption of semiconductors is expected to cross $80 billion by 2026 and to $110 billion by 2030.

Concentrated Manufacturers

What’s more, is that there are not many countries in the world that manufacture these chips. The industry is dominated by the United States of America, Taiwan South Korea, Japan and the Netherlands. Germany is also an emerging producer of ICs.

In all this, it might actually be a good idea for India to get on the bus early.