Q16. India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India? Mention the salient features of the India Semiconductor Mission.
Possible Introductions
Definitional framing:
Semiconductors, often called the “brains of modern electronics,” power devices ranging from smartphones to satellites. They are strategic resources in the digital age, much like oil was in the industrial age.
Contextual framing (India):
India imports over 90% of its semiconductors. With a domestic market projected to touch $100–110 billion by 2030, the country aspires to become a trusted global hub for chip manufacturing and design.
Current affairs framing:
The India Semiconductor Mission (ISM), with an outlay of ₹76,000 crore, has already approved 10 projects across 6 states worth ₹1.6 lakh crore investments (2025). Events like SEMICON India 2025, hosting 300+ exhibitors from 18 countries, underline India’s rising global profile in this sector.
Directive Analysis
“Challenges” → requires highlighting financial, technological, infrastructural, and ecosystem barriers.
“Salient features of ISM” → requires explaining objectives, schemes, and institutional mechanisms.
Body of the Answer
1. Challenges Faced by India’s Semiconductor Industry
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- High Capital Requirement: Fab units cost $5–10 billion each; securing such capital is difficult despite government subsidies.
- Technological Dependence: India lags in cutting-edge fabrication (<10 nm); critical know-how lies with Taiwan, South Korea, and the US.
- Infrastructure Deficit: Chip fabs demand uninterrupted power, ultra-pure water, and advanced logistics—still patchy in India.
- Skill Gaps: Though India supplies 20% of global chip design engineers, there is a shortfall in fabrication expertise; by 2032, demand for ~10 lakh skilled workers is projected.
- Raw Material & Equipment Dependency: Lithography machines, specialty gases, and wafers are imported, creating vulnerability.
- Global Competition: Established hubs like Taiwan (60% of chips, 90% advanced nodes) dominate, making India’s entry challenging.
- Policy & Execution Risks: Long gestation projects face delays in approvals, land, and ecosystem development.
X-Factor: The 2021–22 global chip shortage disrupted auto and electronics supply chains, showing why self-reliance is crucial for India’s economic security.
2. Salient Features of the India Semiconductor Mission (ISM)
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- Mission Design: Launched in Dec 2021, ISM is an independent division under Digital India Corporation, led by global experts, with ₹76,000 crore outlay.
- Semiconductor Fabs Scheme: Up to 50% support for fabs at advanced nodes (e.g., Tata Electronics–PSMC fab in Gujarat).
- Display Fabs Scheme: Incentives for AMOLED/LCD display units to reduce imports.
- Compound Semiconductors & ATMP/OSAT Scheme: Support for chip packaging, testing, and compound semiconductors.
- Design Linked Incentive (DLI) Scheme: ₹1,000 crore to support 70+ design startups; 20 chips already fabricated by student/startup consortia.
- Recent Developments (2023–25):
- Micron ATMP facility (Sanand, Gujarat) with ₹22,500 crore investment.
- Tata–PSMC fab in Dholera (~₹91,000 crore), capacity of 50,000 wafers/month.
- HCL-Foxconn JV (Jewar, UP) to produce display driver chips (36 million units/year).
- Semicon India 2025: 300+ exhibitors, 18 nations, 4 international pavilions.
- Talent & Skilling Initiatives: Target to train 85,000 engineers in 10 years. C2S program: 278 institutions + 72 startups given access to design tools. Partnerships with IBM, Lam Research, Purdue University, IITs for R&D.
- Strategic Goals: Secure supply chains in equipment, materials, and services; encourage indigenous IP generation; promote cutting-edge research (e.g., 3nm design centres in Noida & Bengaluru).
X-Factor: India is moving into Silicon Carbide semiconductors and 3D Glass packaging technology, crucial for defence, EVs, and space.
Possible Conclusions
Future-oriented:
India’s semiconductor journey, from imports to indigenous fabs, signals a shift from dependence to dominance in digital technologies.
Policy-oriented:
Scaling ISM requires global tech partnerships, raw material security, faster clearances, and deep R&D investments.
