S. Krishnan, Secretary, Ministry of Electronics and Information Technology, Government of India, speaking at the launch event of iVP Semiconductor, in Chennai on Saturday.
| Photo Credit: Bijoy Ghosh

S. Krishnan, Secretary, Union Ministry of Electronics and Information Technology (MeitY), on July 6 said that around ₹70,000 crore for the ₹76,000-crore incentive program for the development of sustainable semiconductor and display ecosystem has already been committed. 

“India’s incentive program is one of the most generous initiatives in the world. In addition to the 50% incentive from the Centre, States such as Tamil Nadu have provided a top-up incentive through their respective policies. Therefore, 75% of the cost of setting up a unit is subsidised and it works on a pari-passu basis,” he said at the launch of iVP Semi, a fabless semiconductor start-up founded by Raja Manickam, a veteran in the semiconductor engineering space. 

Mr. Krishnan said that the remaining sum [of the ₹76,000 crore] would be committed under the India Semiconductor Mission (ISM) program announced in 2021. “We may have to seek more funds from the Union Finance Ministry,” he said, and stressed the need for India to deepen the value chain in the sector.   

At present, India’s total electronics export stood at $110 billion, and a lot of this takes place about 50 km from Chennai, in and around Sriperumbudur. In exports, there is about 18-20 per cent value addition, owing to assembly and labour factors, he pointed out. “This is significant for India as it provides many jobs to many people. However, mostly, it is an assembly exercise building on the arbitrage in terms of labour cost. While this provides employment, there is a risk if we do not deepen the value chain in the country. In that case, this may move to another country that offers cheaper labour,” he added. 

Mr. Krishnan further said that to make India a major player in the sector, it was important to ensure that the country manufactured more components. This is where the Centre, the MeitY and the State governments need to work together, he said, adding that on the design aspect of semiconductors, India has been successful with an estimated 20% to 25% of the global design workforce being based out of the country. 

“However, it is a different scenario when it comes to manufacturing. Semiconductor is all about precision manufacturing, zero error and getting everything down to the atomic level to achieve precision. That is something we need to learn from Taiwan, Korea and Japan,” Mr. Krishnan said. 

 “….Globally, and geo-politically, the supply chain for semi-conductor needs to be diversified. That is partly what the [COVID-19] pandemic taught us — that you cannot rely on one source. Some amount of diversification is important, and that is what the Government of India is keen on ensuring,” Mr. Krishnan said.

“TATAs [the TATA Group of companies] are setting up a fab unit. We need more fabs, and all other suppliers and equipment manufacturers. There are nearly 300 vendors who supply equipment, and necessary chemicals. We will need to support all of that ecosystem, and that is what we intend to do,” he said. 

MeitY is working on a follow-up initiative to the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors, which ended on March 31, 2024, Mr. Krishnan said.