India is embarking on an ambitious journey to establish itself as a global leader in the semiconductor industry, driven by a projected domestic semiconductor consumption expected to surpass $80 billion by 2026. At the core of India’s pursuit of semiconductor self-reliance lies a strategic vision aimed at reducing import dependence and fostering domestic manufacturing capabilities. Policymakers, including Prime Minister Narendra Modi, have underscored the sector’s significance in India’s future and envision the nation as a pivotal player in the global semiconductor supply chains.
With a burgeoning consumer durable electronics market, silicon manufacturing holds paramount importance in India. The country currently boasts 966 semiconductor companies, encompassing key players like Cricket Semiconductor, Micron Semiconductor India, ROHM Semiconductor India, and more (source: IBEF). The Indian semiconductor industry is ripe with high-growth potential, as the industries relying on semiconductors as inputs are experiencing robust demand. Aligned with this vision, the government is unwavering in its dedication to developing the Electronics System Design and Manufacturing (ESDM) ecosystem, offering generous subsidies and incentives to foster electronics manufacturing units within India.
However, the industry faces notable challenges, including producing cost-competitive devices in substantial quantities and inadequate investments in integrated circuits (ICs) manufacturing. Supply chain complexities, limited power supply, product conceptualization, market penetration, and funding further add to the hurdles faced by semiconductor companies. Moreover, the impact of the pandemic-induced shortage has posed additional challenges since 2020.
To surmount these obstacles, the government is actively scouting locations for plants with ample land, water, and skilled manpower, complemented by 50 percent capex support, tax breaks, and other incentives. Ensuring 24X7 uninterrupted electricity supply, a prerequisite for semiconductor manufacturing, is being diligently pursued. Additionally, strategic placement of airports and customs facilities near semiconductor clusters is being considered to facilitate efficient exports.
India is on the cusp of emerging as a major global hub in semiconductor manufacturing over the next decade. With its sizeable consumer market, robust design foundation, and government backing through subsidies and incentives, India possesses the essential elements to become a prominent player in the global semiconductor industry. However, addressing challenges such as cost-competitive production and infrastructure enhancement remains imperative. With continued investments and unwavering support from both the government and private sector, India’s semiconductor industry is poised for a promising and prosperous future.
