What is medulla to human brain is a semiconductor to electronics, both are smallish, yet critical. Semiconductors are specialized devices comprised of integrated chips which are vital for modern electronics. Semiconductor supply chain forms the backbone of today’s digital economy as it caters to thousands of companies, millions of people and transporters. Presently they are the fourth most traded product globally. According UNCTAD estimation, semiconductor business would be looking up to $1.0 trillion by 2035 ($0.4 trillion in 2020)1
India’s dream of foraying into global semiconductor supply chain got a shot in the arm with the Vedanta group deciding to establish a manufacturing plant, followed by 5 more proposals for an investment of Rs. 1.53 trillion under consideration. Operations strategies suggest manufacturing at the source of consumption, preferring India as an attractive destination for all global players. Severe shortage of semiconductor chips, the basic building blocks of all gadgets, adversely impacting supply chains across all industry segments, inviting global attention.
India Semiconductor Mission (ISM) launched in 2021, with a team of global experts is a nodal agency to identify and implement schemes to expedite entry into global semiconductor supply chain league. Its vision is to build a vibrant semiconductor and display design eco-system to enable India’s emergence as a global hub for electronic manufacturing and design.
- Indian semiconductor market is expected to jump four-fold to reach $64 billion by 2026 from $27 billion in 20211.
- Domestic semiconductor component market is expected to see cumulative revenue jump to $600 billion during 2021-262.
- India could become a significant supplier across the semiconductor eco-system with an estimated market of $1 trillion by 2030, and a potential to cater to $85-100 billion.
Government of India, launched a few schemes in this regard.
- Design-Linked Incentive Scheme (DLI2022): Launched to offset the disabilities in the domestic semiconductor industry to move up in value-chain and strengthen the chip design ecosystem.
- Production-Linked Incentive Scheme (PLI2021): Thisindustry-exclusive scheme has been extended to the program for development of semiconductors and display manufacturing with an outlay of Rs. 76000 crore, providing support up to 50% of project cost for six years.
- Domestic consumption: India’s own consumption is expected to cross $80 billion by 2026 and $110 billion by 2030 making it a preferred location for investments.
- Skill base: All top 25 semiconductor design companies have their R&D and design centres in India. Moreover, semiconductor design talent pool in India constitutes 20% of world’s design engineers.
- Reforms: To ease the process of doing business, the government brought reforms.
- Digitalization in bringing speed and transparency in the regulatory framework.
- Favourable taxation structure
- Creating a massive digital infrastructure to reach out to 1.3 billion homes and connecting 6lakh households with broadband.
- Venturing into Semiconductor domain is bound to pave way for India to lead the next technology revolution.
- It is of great strategic importance for economic self-reliance.
- The tiny semiconductor chip finds application in India’s fastest growing consumer electronics market, world’s second largest automobile market and massive defence and other strategic end user segments
- It is indeed a multi-billion-dollar opportunity if visualised on a mission mode.
- Under prevailing geo-political turbulence in other regions, global players prefer to relocate their operations to politically stable countries like India.
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In the long concept to consumers journey of the semiconductors, where do you visualise your role? Why?
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1. Omri Wallach- Visualizing The Global Semiconductor Supply Chain-Visual Capitalist – December14, 2021
2. India Semiconductor Mission- Ministry of Electronics and IT, Govt. Of India.
3. Naina Bhardwaj-What are Production-Linked Incentive Schemes…India Briefing-March 10, 2022