Mains Marathon

Approach

• Describe Semiconductor and its benefits.
• Discuss the need for promoting semiconductor industry in India.
• Explain the National Semiconductor Mission of India and how this will ensure production of semiconductors in India.
• Conclude by suggesting a way to develop semiconductor industry.

Answer

Semiconductors are materials which have a conductivity between conductors and insulators. They can be pure elements, silicon or germanium or compounds; gallium, arsenide or cadmium selenide. They are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products. India currently imports all semiconductor chips and the market are estimated to touch $100 billion by 2025 from $24 billion now.

Need for promoting Semiconductor Industry in India

• Semiconductor chips are the lifeblood of the modern information age. They enable electronic products to compute and control actions that simplify our lives. They are used in critical infrastructures such as communication, power transmission, etc., that have implications for national security.
• Development of the semiconductor and display ecosystem will have a multiplier effect across different sectors of the economy with deeper integration to the global value chain. There are not many countries in the world that manufacture these chips. The industry is dominated by the United States of America, Taiwan, South Korea, Japan, and the Netherland
• India currently imports all chips, and the market is estimated to touch $100 billion by 2025 from $24 billion now. India’s own consumption of semiconductors is expected to cross USD 80 billion by 2026 and to USD 110 billion by 2030.

Indian Semiconductor Mission (ISM)

The ISM was launched in 2021 with a total financial outlay of Rs76,000 crore under the aegis of the Ministry of Electronics and IT (MeitY). The programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystems. ISM will serve as the nodal agency for efficient, coherent and smooth implementation of the schemes.

Components of ISM which will led to increase in the production of Semiconductors in India:

• Scheme for setting up of Semiconductor Fabs in India: It provides fiscal support to eligible applicants for setting up Semiconductor Fabs which is aimed at attracting large investments for setting up semiconductor wafer fabrication facilities in the country.
• Scheme for setting up of Display Fabs in India: It provides fiscal support to eligible applicants for setting up of Display Fabs which is aimed at attracting large investments for setting up TFT LCD / AMOLED based display fabrication facilities in the country.
• Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India: The Scheme provides a fiscal support of 30% of the Capital Expenditure to the eligible applicants for setting up of Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab and Semiconductor ATMP / OSAT (Outsourced Semiconductor Assembly and Test) facilities in India.
• Design Linked Incentive (DLI) Scheme: It offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.

The Schemes provided under Indian Semiconductor Mission will promote production of Semiconductors in India

Challenges Faced by India

• High Investments Required: This sector involves huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology.
• Minimal Fiscal Support from Government: The level of fiscal support currently envisioned is minuscule.
• Lack of Fabrication Capacities: India has a decent chip design talent but it never built-up chip fab capacity. The ISRO and the DRDO have their respective fab foundries but they are primarily for their own requirements. India has only one old fab which is located in Mohali, Punjab.
• Extremely Expensive Fab Setup: A semiconductor fabrication facility can cost multiples of a billion dollars to set up even on a relatively small scale and lagging by a generation or two behind the latest in technology.
• Resource Inefficient Sector: Chip fabs are also very thirsty units requiring millions of liters of clean water, an extremely stable power supply, a lot of land and a highly skilled workforce.

As fiscal support is provided under India Semiconductor Mission, India can grow in the Semiconductor sector also. Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0. India should aim to become a key player in a trusted, plurilateral semiconductor ecosystem that keeps key adversaries out. Favourable trade policies are critical for building a plurilateral semiconductor ecosystem.