India has become the world’s second-largest producer of mobile phones, with a projected output value of US$ 49.16 billion by 2024. On March 13, 2024, Prime Minister Mr. Narendra Modi lay the groundwork for three semiconductor projects worth a combined Rs. 1.25 lakh crore (US$ 14.97 billion) at an event called India’s Techade: Chips for Viksit Bharat. The process of establishing manufacturing facilities in India has been made simpler by significant government efforts like “Digital India,” “Made in India,” and encouraging regulations like a favorable FDI policy for the electronics manufacturing sector. The Indian government wants to boost the country’s share of the global electronics market by about US$ 400 billion, including US$ 120 billion in exports, or 9–10%, after COVID.
Unpredictability Of The World Economy
Due to the unpredictability of the world economy, the funding landscape for digital startups became dire in 2023, with a 67% YoY decline in total capital to US$ 6.0 billion. The peak funding levels seen in 2021 (US$ 24.1 billion) and 2022 (US$ 18.2 billion), when investors showed faith in Indian digital entrepreneurs, preceded this fall. The quantity of deals fell to 824 in 2023. Nonetheless, rather than being a long-term trend, the reduction seems to be cyclical. STPI signs memorandums of understanding to enhance the environment of IT startups: In order to promote entrepreneurship and support tech startups in the nation, AIC STPINEXT Initiatives (STPINEXT), a special purpose vehicle of Software Technology Parks of India (STPI), an organization under the Ministry of Electronics and Information Technology (MeitY), has signed two memorandums of understanding (MoUs): one with HDFC Bank and the other with Excelpoint Systems India Pvt. Ltd. These partners would be essential in helping the businesses along their growth journey by providing them with market connections and access, technical advice and assistance, mentorship, investor pitches, finance support, and more.
Modified Scheme for Establishing Display Fabs
The country offers financial assistance for the establishment of semiconductor wafer production facilities through the Modified Scheme for Semiconductor Fabs. For all technology nodes, there is financial support available for the establishment of silicon-based semiconductor fabs equal to 50% of the project cost. The Modified Scheme for Establishing Display Fabs offers financial assistance for the establishment of facilities for the manufacturing of TFT LCD/AMOLED-based displays. It offers 50% of the project’s cost in financial support.
Modified Plan for Establishing Discrete Fabs, Silicon Photonics
For the purpose of establishing Compound Semiconductors, Silicon Photonics (SiPh), Sensors (including MEMS) Fabs, Discrete Semiconductor Fabs, Semiconductor ATMP/OSAT facilities in India, it offers qualified applicants financial support equal to 50% of the Capital Expenditure.
Create a Linked Incentive Program: It provides financial incentives, design infrastructure support, and deployment of semiconductor design for integrated circuits (ICs), chipsets, systems and IP cores (SoCs), and semiconductor linked design at different phases of development and implementation. The program offers a “Deployment Linked Incentive” in addition to a “Product Design Linked Incentive.”
Compendium of Semiconductor & ESDM Policies in India
The 2024 Edition of the Compendium of Semiconductor & ESDM Policies in India is a new report released by the India Electronics and Semiconductor Association (IESA). The paper provides a thorough and up-to-date overview of the policies and incentives available to the semiconductor and ESDM industry from the Government of India and its 14 states. At the IESA Vision Summit 2024, the report was introduced by Shri. S. Krishnan, Secretary MEITY.
Setup of Semiconductor Fabs in India
The Semiconductor Industry is making a buzz across the country with about eight states in India—Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Odisha, Tamil Nadu, Telangana, and Uttar Pradesh—have affirmly mentioned to setup semiconductor fabs. Of these, four states have already developed specific semiconductor policies: Gujarat, Odisha, Tamil Nadu, and Uttar Pradesh. The most recent report from IESA contrasts and compares the various incentives and policies that are provided by various governments, and it offers suggestions and insights for the stakeholders.
The Semicon India Program
In addition, the $10 billion Semicon India Program was introduced with the goal of creating a sustainable semiconductor and display ecosystem in the nation. With the help of this program, India will become a major worldwide hub for the production of semiconductors and displays, encourage independence, fortify the robustness of global supply chains, and open the door for India to take the lead in technology within the sector. For more information, visit the Invest India website’s Semiconductors sub-sector page.
The Resources Becomes Critical
Securing vital natural resources is a crucial component of the electronics system design and manufacturing (ESDM) industry, as it helps India realize its goal of localizing its value chain. India should concentrate on using its significant mineral deposits as a way to obtain the resources the nation lacks. India must make sure that it depends on friendly nations with low political risk to meet its commodity demands, particularly in the area of minerals, where the country suffers extreme shortages and a high level of external dependence.
To guarantee that India remains the center of the ESDM sector, a multifaceted strategy is required. Given the window of opportunity that the next ten years will present for India to participate in the value chain established by the geopolitical context is still miniscule.
Employment in the Electronics Sector
It is predicted that employment in the electronics sector would increase dramatically. A “Scheme for Financial Assistance to select States/UTs for Skill Development in Electronics System Design and Manufacturing (ESDM) sector” was therefore approved by DeitY in November 2013 in order to facilitate skill development in the ESDM sector, with a focus on students/unemployed youth at 9–10th standard onwards, ITI, Diploma, non-engineering graduates, etc. to increase their employability to work in “Manufacturing” and “Service support” functions. Ninety thousand individuals will receive support under the program in the chosen States for five tiers of vocational skill development courses accredited by the Electronic Sector Skill Council, the Telecom Sector Skill Council, and NIELIT. With a grant-in-aid of about Rs. 100 crore, the scheme has a total outlay of Rs. 113.77 crore.
Future of Electronics Manufacturing in India
India’s gradual ascent to the top of the manufacturing landscape will be aided by the greater attention that international and Indian firms are paying to manufacturing technology there. This will impact Indian consumers in multiple ways. They will be able to purchase the newest technology for a significant reduction in cost, faster and more frequent launches, and an abundance of options will be available. Improvements in the nation’s post-sale customer service and repairs will also follow as a result of this, since parts that were previously imported from overseas would now be easily obtained from the manufacturers and may even be salvaged from previous models.
Translocating Manufacturing in India
The demand for translocating manufacturing to India has been fueled by the country’s stable policy environment, cooperative efforts between the federal and state governments over the general direction of industrial growth, and comprehensive operational policy measures. This has been made easier by multinational companies’ increasing drive for supply chain diversity in the wake of the COVID-19 epidemic and the global emergence of geopolitical fault lines. India has managed to keep its manufacturing salaries competitive in addition to these other variables. With the help of government supply-side incentives and the implementation of programs like Bharatmala, Sagarmala, and PM Gati Shakti, the nation’s infrastructure gaps will be gradually closed, increasing capital productivity and the investment-to-GDP ratio and starting a positive feedback loop.
