So far, five semiconductor units with a combined investment of around Rs 1.5 lakh crore have been approved under the government’s incentive scheme. “I think within the next decade, India can be a leader on the world scale,” said Bob Pragada, CEO of engineering services company Jacobs.
In June 2023, the first project was approved. The project being run by US-based Micron Technology is expected to roll out the first batch of chips packaged at its Sanand unit in Gujarat early next year. The total investment in the project is pegged at $2.75 billion, of which Micron has committed $825 million.
Three semiconductor units with an investment of Rs 1.26 lakh crore were approved in February. Another unit with an investment of Rs 3,300 crore was approved early this month.
Out of the five semiconductor projects approved by the union cabinet so far, four are to be set up in Gujarat, while one will be in Assam. These five projects have exhausted almost the entire Rs 76,000 crore incentive outlay announced by the government in 2021.
Akash Tripathi, CEO of India Semiconductor Mission, recently indicated that the government may come out with additional incentive plans to attract more semiconductor projects in the country. According to Tripathi, the target is to increase the number of semiconductor plants in India to 10 in the next 10 years.
“India alone consumes more than a billion chips annually and global consumption may be as high as a hundred billion,” said Shashwath T R, CEO of Mindgrove Technologies.
Semiconductor manufacturing is a very complex and technology-intensive sector. It is highly capital intensive with long gestation and payback periods. While India already accounts for around 20% of the global workforce in chip design, full-fledged manufacturing units need different skill sets. The supply chain is another issue where India needs to get its act together. Rapid changes in technology require significant and sustained investments. As government incentives seem to be the key driver of the investments in the sector so far, it would be interesting to see how it is sustained.
The use of semiconductors or chips is widening with the advancement in technology. It plays a critical part in the manufacturing of electronic products like smartphones, cameras, and computers. In cars, functions like power steering and entertainment systems are dependent on chips. The increasing adoption of artificial intelligence (AI) will further widen the use of chips in almost all sectors of the economy.
