In today’s world, semiconductors, or chips, are considered the most crucial part of any electronic device. From mobile phones to fighter jets, chips are used in everything, making the semiconductor industry grow rapidly worldwide. The Indian government is also striving to become a key player in semiconductor manufacturing.
Let’s understand the current state of the semiconductor industry in India and the challenges it may face in becoming a global semiconductor hub.
What’s Happening?
India’s semiconductor mission is being driven by both government initiatives and private sector support. Recently, Chennai-based software-as-a-service company Zoho announced plans to launch a commercial semiconductor manufacturing unit in Tamil Nadu.
In March 2024, India took a significant step toward its semiconductor manufacturing goal by laying the foundation for three semiconductor plants: a chip manufacturing plant in Dholera, Gujarat, and two ATMP (Assembly, Testing, Marking, and Packaging) plants in Sanand, Gujarat, and Morigaon, Assam.
Additionally, in a crucial meeting held in New Delhi, led by India’s National Security Advisor Ajit Doval and his U.S. counterpart Jake Sullivan, India and the U.S. decided to closely cooperate on supply chains, semiconductors, and critical minerals.
What Challenges Does India Face?
High Costs and Long Timeframes: Setting up a semiconductor manufacturing unit is a costly and time-consuming process. Establishing a fabrication plant can cost between $10 billion and $20 billion and may take several years to become operational.
Shortage of Skilled Engineers: According to a report by TeamLease Degree Apprenticeship, India may face a shortage of 2,50,000 to 3,00,000 professionals in the semiconductor industry by 2027.
Lack of Experience: India currently lacks significant experience in the semiconductor industry, meaning the country will need to learn from leading nations in this field.
Global Competition: India will face stiff competition from countries like South Korea, Taiwan, China, and the United States.
Despite these challenges, the Indian government is taking several steps to boost the semiconductor industry.
How is India Overcoming These Challenges?
The Indian government is working on several initiatives to promote the semiconductor industry:
India Semiconductor Mission: This Rs 76,000 crore scheme provides financial assistance to establish semiconductor manufacturing units and ecosystems in the country.
Design Linked Incentive Scheme (D-LIcS): This scheme offers financial incentives to Indian companies for the design, development, and testing of semiconductor chips.
Attracting Foreign Companies: The government is encouraging foreign companies to set up semiconductor units in India.
What’s in it for Investors?
The Indian semiconductor industry is in its nascent stages, but it offers attractive opportunities for investors. Historically, companies in the Indian semiconductor industry have performed well compared to other industries. However, expecting similar returns in the future without proper research might not be prudent.
What’s Next?
The government recently announced that over 300 major colleges in India will start specialised semiconductor courses. This will help build a strong pipeline of semiconductor professionals in the country.
Additionally, it is estimated that the Indian semiconductor industry could reach $100 billion by 2030. This rapid growth presents an attractive opportunity for investors and indicates that India is on the path to becoming a major hub in the semiconductor sector.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
