India’s semiconductor industry is at a critical juncture, poised for substantial growth and global relevance. As the world increasingly depends on semiconductors for technological advancements, India recognizes the strategic importance of developing a robust semiconductor ecosystem. The government’s recent initiatives, such as the Production-Linked Incentive (PLI) scheme for the electronics sector, signify a commitment to fostering domestic semiconductor manufacturing. However, challenges persist, including the need for substantial investments in research and development, talent development, and infrastructure. A comprehensive and collaborative approach involving industry stakeholders, academia, and the government is imperative to position India as a significant player in the global semiconductor landscape. The nation’s success in this endeavor will not only strengthen its economic prowess but also contribute to shaping the future of technology on a global scale.
Tag: GS-3 Science and Tech.
In News:
A recent article explores how a revamped Design-Linked Incentive (DLI) scheme under the India Semiconductor Mission (ISM) could strengthen India’s competitive edge and enhance its engagement across different phases of the semiconductor global value chain.
Overview of the India Semiconductor Mission (ISM)
- Launched in 2021 with a financial outlay of Rs. 76,000 crore under the Ministry of Electronics and IT.
- Aims to develop sustainable semiconductor and display ecosystems in India.
- Encompasses various schemes to support semiconductor, display manufacturing, and design.
Components of the ISM
- Semiconductor Fabs
- Scheme for setting up Semiconductor Fabs in India.
- Display Fabs
- Scheme for setting up Display Fabs in India.
- Compound Semiconductors
- Scheme for setting up Compound Semiconductors, Silicon Photonics, Sensors Fab, and Semiconductor Assembly, Testing, Marking, and Packaging (ATMP) facilities.
- Design Linked Incentive (DLI) Schemes
- Focuses on providing financial incentives and design infrastructure support for semiconductor design.
- Implemented by C-DAC (Centre for Development of Advanced Computing).
Components of the DLI Scheme
- Chip Design Infrastructure Support
- Creation of India Chip Centre by C-DAC.
- State-of-the-art design infrastructure, EDA Tools, IP Cores, and support for MPW.
- Product Design Linked Incentive
- Reimbursement of up to 50% of eligible expenditure, up to Rs. 15 Crore per application.
- Fiscal support for approved semiconductor design applicants.
- Deployment Linked Incentive
- Incentive of 6% to 4% of net sales turnover over 5 years, up to Rs. 30 Crore per application.
- Provided to approved applicants deploying semiconductor design in electronic products.
Vision and Significance of ISM
- Vision: Build a vibrant semiconductor and display design ecosystem for India to become a global hub for electronics manufacturing and design.
- Significance: Organizes efforts for the promotion of the semiconductor and display industry, formulates long-term strategies, and facilitates collaborations for research and skill development.
Global and Indian Semiconductor Market Scenario
- Global Scenario
- Concentrated in Taiwan, South Korea, and the U.S.
- USD 500-600 billion industry catering to a USD 3 trillion global electronics industry.
- Indian Scenario
- Valued at USD 23.2 billion, projected to reach USD 150 billion by 2029.
- Initiatives like ISM and SPECS to support semiconductor R&D and manufacturing in India.
Challenges in the Semiconductor Industry in India
- Data Latency
- Challenges in managing varied co-products and data latency.
- Customer-Specific Needs
- Varied needs based on customer demands.
- Front-end (FE) Built Output
- Complexity in supply chain due to additional manufacturing steps.
- Back-End (BE) Cycle Times
- Quicker BE cycle times compared to FE.
- Supply Chain Visibility
- Challenges in end-to-end supply chain visibility.
- Fab Setup Costs
- Extremely expensive setup costs for semiconductor fabs.
Issues in DLI Scheme Implementation
- Lacklustre Uptake
- Limited adoption due to ownership restrictions and funding landscape.
- Competitive Industry
- Tough competition with established players like the U.S., South Korea, Taiwan, and China.
- Intellectual Property Challenges
- Access to intellectual property and licensing agreements can be hurdles.
- Global Investments
- Gaining a competitive edge and attracting global investments pose challenges.
Overhauling the ISM and DLI Scheme
- Integrating Goals
- Integrate strategic goals involving strategic sectors, global value chain integration, and leveraging existing design capabilities.
- Maximizing Investment Benefits
- Prioritize investments to maximize benefits, focusing on the less capital-intensive design ecosystem.
- Delinking Ownership
- Delink ownership restrictions from semiconductor design development for start-ups.
- Attract more global exposure and financial stability.
- Broadening DLI Scheme Focus
- Shift focus to cultivate design capabilities for various chips.
- Increase financial support for a broader impact.
- Capable Institution for Implementation
- Establish a capable institution to lead policy implementation.
- Tolerate a certain failure rate and treat start-ups as exploratory risk-taking entities.
Utilizing Existing Facilities and Collaboration
- Utilize public sector enterprises for semiconductor fab foundry setup.
- Explore collaboration opportunities with countries like the U.S., Japan, Taiwan, South Korea, etc.
Conclusion
- The DLI scheme needs a shift in focus towards cultivating semiconductor design capabilities in India.
- Revisions should include delinking ownership from development, enhancing financial support, and reconsidering the role of the nodal agency.
- A recalibrated policy, guided by a capable institution, can establish India’s foothold in the high-tech semiconductor sector.
| UPSC Previous Year Questions Prelims (2008) Q. Which one of the following laser types is used in a laser printer? (a) Dye laser (b) Gas laser (c) Semiconductor laser (d) Excimer laser Ans: (c) Prelims (2018) Q. With reference to solar power production in India, consider the following statements: 1. India is the third largest in the world in the manufacture of silicon wafers used in photovoltaic units. 2. The solar power tariffs are determined by the Solar Energy Corporation of India. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Ans: (d) |
Source: TH
Frequently Asked Questions (FAQs)
1. FAQ: What is the current status of India’s semiconductor industry?
Answer: As of now, India’s semiconductor industry is in a transformative phase, showing promising growth potential. The government has introduced initiatives like the Production-Linked Incentive (PLI) scheme to boost domestic semiconductor manufacturing.
2. FAQ: How is India addressing the talent gap in the semiconductor sector?
Answer: India is actively investing in skill development programs and educational initiatives to bridge the talent gap. Collaborations between industry and academia are being strengthened to ensure a skilled workforce for the semiconductor industry.
3. FAQ: What role does government policy play in promoting the semiconductor industry in India?
Answer: Government policies, particularly the PLI scheme, play a crucial role in incentivizing and promoting semiconductor manufacturing in India. These policies aim to attract investments, enhance competitiveness, and foster a conducive business environment.
4. FAQ: What are the main challenges faced by India’s semiconductor industry?
Answer: Challenges include the need for significant investments in research and development, infrastructure development, and global competitiveness. The industry is actively working with the government to address these challenges and create a conducive environment for growth.
5. FAQ: How does the semiconductor industry contribute to India’s economic growth?
Answer: The semiconductor industry is a key driver of economic growth, contributing significantly to India’s GDP. It not only creates job opportunities but also fosters innovation, enhances technological capabilities, and positions India as a competitive player in the global technology landscape.
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