Seizing A Trillion-Dollar Opportunity By 2030

SUMMARY

As per recent estimates, the semiconductor market in India, currently valued at $23.2 Bn, is predicted to reach $80.3 Bn by 2028

According to government estimates, the cost of starting a chip fabrication plant in India might range from $5 to $7 Bn.

The government launched India’s 2020 Semiconductor Policy to lower reliance on imports, promoting domestic semiconductor design and manufacturing capabilities

By 2030, the global semiconductor market is expected to be worth a trillion dollars, thanks to developments in electronics, artificial intelligence, and autonomous systems. This offers India a huge chance to position itself as a prominent player in international supply networks. 

The geopolitical environment is driving diversification away from Taiwan’s hegemony in chip production, hence India’s goal of building a strong semiconductor ecosystem is not only ideal but also inevitable.

Prime Minister Narendra Modi presented a plan at the recently concluded SEMICON India 2024 that highlights India’s democratic ideals and robust supply chains while combining the nation’s expanding skilled population with an investment-friendly climate. 

India is putting a lot of emphasis on semiconductor infrastructure as it develops a workforce of 85,000 engineers, technicians, and R&D specialists. India is making a significant attempt to establish itself as a global centre for semiconductor production, in line with global demand.

India’s Expanding Semiconductor Market: A World Of Possibilities

According to recent estimates, the semiconductor market in India, currently valued at $23.2 Bn, is predicted to rise at an astounding 17.10% compound annual growth rate (CAGR) to reach $80.3 Bn by 2028. The rising demand for electronics, smart devices, and cutting-edge technologies like artificial intelligence (AI), which mostly rely on sophisticated semiconductor chips, is what is driving this growth.

The government’s commitment to lowering reliance on imports and promoting domestic semiconductor design and manufacturing capabilities is reflected in India’s 2020 Semiconductor Policy. 

Building semiconductor design capability and increasing manufacturing volume are its two main goals. The strategy encourages innovation and fosters research and development (R&D), creating a cooperative ecosystem between research institutions, industry, and academia.

The Indian government is further sweetening the pot for semiconductor makers by providing financial incentives to develop chip fabs domestically through programs like the Production Linked Incentive (PLI) Scheme. India hopes to do this in order to develop a self-sufficient semiconductor sector that serves both local and foreign markets.

Challenges On The Path To Semiconductor Self-Reliance

However, India’s ambitious semiconductor journey is not without its challenges. The complexities and resource requirements of semiconductor manufacturing present significant hurdles that must be overcome.

Water and energy are used extensively in the semiconductor manufacturing process. It needs large amounts of ultra-pure water, necessitating complex purification systems, as well as a constant power source. 

Ensuring these resources are available around-the-clock is a difficult task for a nation with sometimes shoddy infrastructure, particularly in areas with unreliable water and utility systems.

Additionally, the establishment of a semiconductor fabrication factory is expensive. According to government estimates, the cost of starting a chip fabrication plant in India might range from $5 to $7 Bn. Investors may be seriously discouraged by this huge upfront capital demand if it is not made up for with large government incentives and subsidies.

India’s long-standing battle with inefficient bureaucracy impedes its aspirations in the semiconductor industry. Several government agencies must approve the establishment of domestic manufacturing, and delays at each level deter potential investors. Simplifying this procedure will be essential to luring and keeping the largest semiconductor companies.

Smooth semiconductor fabrication necessitates a consistent and dependable power source. Unfortunately, there are not many places in India that can house chip production equipment because of the country’s propensity for power shortages and outages. 

For continued expansion, attention must be paid to the energy infrastructure, particularly in important centres for semiconductors.

Modern technology, much of which is licensed at a premium from patent holders, is essential to the semiconductor manufacturing industry. It will be costly for emerging semiconductor businesses in particular to acquire these technologies and make sure they are used appropriately in India. To overcome this obstacle, developing indigenous knowledge and securing advantageous terms for technology licences are essential.

And finally, despite India’s efforts, FDI in electronics remains under 1% of the total FDI inflow, largely due to hurdles like skilled labour shortages, delays in land acquisition, and an uncertain tax regime. For India to attract global semiconductor giants, it must address these structural challenges and offer a clearer, more stable investment framework.

Pathways To Future Success

India’s aspiration for the semiconductor industry is a declaration of will for the country’s future, not just an industrial objective. If this industry succeeds, it will establish the country as a leader in technology and guarantee its survival in a world where sophisticated electronics and data-driven ideas are becoming more and more important. 

The government has been focusing heavily on boosting manufacturing, but to truly elevate India’s position, more emphasis on innovation and R&D is crucial. With the abundance of brilliant minds in the country, a stronger push from the government in fostering innovation could significantly accelerate the journey towards self-reliance, particularly in the semiconductor sector. 

While efforts are being made, there’s potential for more targeted initiatives that encourage the development of cutting-edge solutions. If we build a strong innovation ecosystem, it won’t just reduce our dependence on foreign vendors – it could position India as a global leader, with other nations looking to us for advanced technologies.