Semiconductors: Industry’s growth will yield rich dividends

Govt’s efforts to nurture semiconductor ecosystem may help turn India into a global production hub

Nothing has been left untouched by semiconductors, whether it is artificial intelligence (AI)-powered smartphones, adoption of the Internet of Things (IoT), 5G, or the automobile industry.
Nothing has been left untouched by semiconductors, whether it is artificial intelligence (AI)-powered smartphones, adoption of the Internet of Things (IoT), 5G, or the automobile industry.

By Sanjay Gupta

With the tech sector leading the way, the domestic market for electronics is set to grow dramatically in the coming years, driven by demand for cloud computing, 5G deployment, linked vehicles, and online education. When it comes to technologies, we cannot overlook semiconductors, which are the backbone of any venture into developing technologies. Nothing has been left untouched by semiconductors, whether it is artificial intelligence (AI)-powered smartphones, adoption of the Internet of Things (IoT), 5G, or the automobile industry.

Govt initiatives to grow the manufacturing industry
Initiatives like the ‘Digital India’ and ‘Smart City’ programmes have boosted demand for IoT in the electronics devices industry. The government’s Atmanirbhar Bharat initiative is driving significant change, as the focus now is also on expanding hardware manufacturing in India. Due to the lack of a level-playing field in comparison to competing nations, the electronics hardware manufacturing sector is disabled by 8.5% to 11%, with lack of adequate infrastructure, domestic supply chain and logistics issues; high cost of finance; insufficient availability of quality power; limited design capabilities and industry focus on R&D; and inadequacies in skill development being primary hurdles. The National Policy on Electronics introduced in 2019 envisions making India a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving core component development capabilities and creating a competitive environment for the industry globally.

The PLI scheme, introduced at the end of 2021 with the goal of incentivising production, is one of the government’s latest initiatives. It is expected to draw roughly $4 trn in capital expenditure over the next five years and has the potential to employ over 3 mn Indians. The scheme has received applications for Semiconductor and Display Fabs worth $20.5 bn (`153,750 crore) as total investment which is a positive step towards becoming self-reliant.

Semiconductors contribute to growth of the economy
India is still far behind developed countries as far as semiconductors are concerned. Semiconductor fabs have proven to be game-changers for the economies in which they operate, generating enormous employment and producing significant revenue for governments concerned. But to establish a bigger semiconductor ecosystem, the government must clearly outline a strategic vision.

While India is still a few years away from becoming a semiconductor manufacturer, many international corporations operate design centres here, accounting for about 20% of worldwide design skills. In addition, the Semicon India Programme was launched here with a $10-bn incentive outlay with the goal of developing a sustainable semiconductor and display ecosystem in the country. This programme will help India become a global hub for semiconductor and display production, while also promoting self-reliance, strengthening global supply chain resilience, and paving the way for India’s technological leadership in the industry.

The writer is vice-president & India managing director – NXP Semiconductors

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