For decades India has aspired to become a leader in the semiconductor industry. However, due to missed opportunities and a lack of focus, not much was achieved during the last seven decades. 

It was during the second term of Prime Minister Narendra Modi, particularly after the Covid-19 pandemic, that the government tried relentlessly to turn this dream into a reality. In December 2021, the government approved a semiconductor and display scheme worth Rs 76,000 crore. Taking the right approach, this time around, even the projects from big business houses were rejected due to the lack of a technology partner as making chips is way complicated than assembling electronics. With exit poll results indicating Prime Minister Modi will win a third term when the results are announced on June 4, industry expects India’s semiconductor growth to accelerate.

“With early indications from 2024 General Elections, it is pretty evident that NDA government is coming back under the leadership of Narendra Modi. With focus on laying the foundation of Viksit Bharat-2047, it is fantastic for the electronics and semiconductor industry, which will form the economic and technology core of $30 trillion economy,” says Satya Gupta, President of VLSI Society.  He adds, “the electronics & semiconductors sector has huge potential of contributing $3 trillion or 10% to the economy with $2 trillion in domestic consumption and $1 trillion in exports and create 10 crore direct and indirect jobs by 2047. All the leaders, including the prime minister himself, always mention this sector as a key sector for achieving Viksit Bharat’s economic and strategic goals. In a recent interview, External Affairs Minister S. Jaishankar when asked what two key technologies for the future of Bharat also mentioned semiconductor and space”.

For India to become a developed nation by 2047, the strategy for next 25 years should focus on strengthening the already existing electronics and semiconductor manufacturing infrastructure and put strong focus on making India an electronics and semiconductor products nation, say industry experts.

“The industry looks forward to the continuation of government support and enabling policies, as they have been astutely curated and implemented in the present context. Creating further value creation in component manufacturing with a “Product Centric” focus in electronics, new approvals for semiconductor fabrication and ATMP’s with varied technologies are also expected. Convergence of the three vectors of manufacturing, supply chain aspects and responsive logistics to make Bharat, a semiconductor nation and an electronics hub of the future will be a reality, much sooner than expected,” says Anurag Awasthi, Vice President of India Electronics & Semiconductor Association.

As the industry continues to be bullish on India’s policy momentum, especially on electronics manufacturing as well as in fostering emerging technologies, Prabhu Ram, Head – Industry Intelligence Group at CMR the government should focus on attracting upstream players to bolster the domestic electronics manufacturing value chain. This will significantly strengthen electronics manufacturing, thereby enhancing the country’s competitiveness.

Sources suggest that with the anticipated re-election of the Modi government, there is a likelihood of credible proposals being submitted for semiconductor fabs under the India Semiconductor Mission. Constructing semiconductor fabs requires significant investments and time, typically taking 7-10 years to break even. And former central bank governor Raghuram Rajan’s criticism of the semiconductor scheme, suggesting that India’s ambition to become a semiconductor manufacturing nation may not be prudent, had raised scepticism among global players regarding the leadership change in India.

“Assuming the current government remains in power, I believe it has the capacity to enhance its incentives for India’s industrial and manufacturing revolution. Considering that only one fab has been approved thus far, we require the establishment of 4-5 additional fabs. To achieve this, we are contemplating the allocation of another $10 billion or possibly even more in incentives. Moreover, given that display fabs were included in the scheme and with interest shown by companies like Sharp to invest in India, there is industry curiosity. Consequently, there is a possibility that one or two display fabs may also receive approval in India,” says independent semiconductor analyst Arun Mampazhy. He further adds that the government should not get caught up in 28nm technology node and consider Tower Semiconductor proposal as there aren’t many global fabs that have showing interest in setting up fabs in India.

If you’re curious about why countries like India, the United States, and even the European Union are suddenly prioritizing the establishment of semiconductor manufacturing within their borders, experts liken semiconductors to the new oil of the future, asserting that they will significantly shape the trajectory of a nation’s future. Additionally, engaging in semiconductor production positions countries to have a significant presence at the global negotiation table in the decades to come.