Important to ensure India produces more chip components

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Last Updated09/07/2024

Stressing the need for India to deepen the value chain in the semiconductor sector, the Ministry of Electronics and Information Technology (MeitY) said the Centre had already committed about ₹70,000 crore under a ₹76,000-crore incentive program for the development of a sustainable semiconductor and display ecosystem.

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 subsidized.
Stating that the remaining sum from the ₹76,000 crore would be committed under the India Semiconductor Mission program announced in 2021
Out of India’s total electronics export of $110 billion, there was about 18-20% value addition, owing to assembly and labor factors.
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 labor cost. While this provides employment, there is a risk if we do not deepen the value chain. this may move to another country that offers cheaper labor.
It was important to ensure that the country manufactured more components.
This is where the Centre, the MeitY and the State governments needed to work together, adding that on the design of semiconductors, India had been successful with an estimated 20-25% 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.
We will need to support all of that ecosystem, which is what is intended.