In order to reduce the country?s dependence on foreign technology, the government will push for domestic semiconductor manufacturing on a priority basis, according to a senior official of the ministry of communications and information technology. With both civil and defence applications going to consume more and more electronic components in the coming years, India?s current domestic production will hardly be enough to meet the demand.
Joint secretary at the department of IT Ajay Kumar told FE the government is interested in the domestic manufacturing of electronic hardware for three reasons. One is the economic opportunity ?manufacturing can create many jobs. The second is strategic. ?People keep talking of security and that is definitely a concern. If you are running a railway system using routers that are compromised, the whole system can come to a halt. We have a strategic interest in avoiding a halt to any civil application, be it the postal system, the health system or even the energy system,? Kumar said. Third, the world wants India to manufacture to reduce its dependence on China, the current heavyweight of the sector.
According to an assessment by a department of information technology (DIT) task force, the demand for electronics hardware in India is expected to grow from $45 billion in 2009 to $400 billion in 2020. At the current rate of growth, the domestic production can cater to a demand of only $104 billion by the turn of the decade.
The soon-to-be-announced modified special incentive package scheme (SIPS), meant to incentivise hi-tech manufacturing, will reduce the transaction costs for even SMEs willing to invest in chip fabrication and its ecosystem companies, Kumar told FE on the sidelines of India Semiconductor Association?s Vision Summit in Bangalore.
?Issues like technology lock-up will further increase entry barriers for domestic production. We need to start immediately and make this a decade of electronic manufacturing in India,? he noted.
Kumar, however, said it was difficult to break tech lock-ups. ?If you get used to a particular kind of technology, coming out of it becomes much more difficult. The demand for electronic hardware can grow 10 times in the next 10 years. If we do not manufacture, all these products would have to be imported,? he said.
FE had earlier reported that the government may introduce electronic manufacturing clusters and lower the investment threshold required to qualify for subsidies under the modified SIPS.
Electronic systems and manufacturing clearly emerged the flavor of India Semiconductor Association?s summit on Monday. The annual event drew global semicon leaders such as Steve Sanghi, the CEO and chairman of Microchip, and Moshe Gavrielov, CEO of Xilinx. Poornima Shenoy, president, ISA, said, ?ISA has been working with the government as a knowledge partner and has been able to provide several relevant data points. Currently, DIT is looking at Special Incentive Package Scheme II and ISA has made few recommendations for the same.?