It is Time India Builds on their Semiconductor Manufacturing Facilities

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One area in the India Electronics Industry which has the potential to grow at an unprecedented rate and transform the Indian economy is without a doubt the Semiconductor arena. This is because the industries which source semiconductor input like mobile devices, telecommunication equipment, office automation, automobiles, and industrial machinery, to name a few are witnessing a high demand themselves. Today, with the concept of the Internet of Things gaining momentum, there is a further increase in the market for smart computing options hence creating a demand for semiconductors.

With growing technological evolution by increasing our homegrown semiconductor arena we can solve major issues covering traffic to the environmental conservation. On the flip side, the application developments of artificial intelligence and data analytics are further creating value propositions that can be cultivated towards enhancing the country as a whole. The Indian semiconductor arena is positioning their vast pool of brilliant and experienced professionals in semiconductor design. It is pertinent to mention that some of the world’s foremost semiconductor organizations are getting most of their design work from Indian Innovation Centers.  Although there has been rapid progress in the number of startup firms in the semiconductor arena offering solutions targeted to Indian needs, there are no big semiconductor manufacturing facilities in the country yet. This might be able to change owing to the government’s “Make in India” initiatives as the government starts setting up grand targets and making big decisions. The ESDM industry in India stands to benefit mainly from the government’s antagonistic engagement in digital as a part of its ‘Make in India’ policy.

The Present Market:

Electronics System Design Manufacturing (ESDM) industry is growing at a fast rate, according to the Department of Electronics and Information Technology (DeitY), approximately 2,000 chips are being designed in a year in India and 20,000 plus engineers are working on different features of chip design and corroboration. As per the India Electronics & Semiconductor Association, ESDM market is all set to increase from US$ 76 Bn in 2013 to US$ 400 Bn by 2020. Alongside the utilization of semiconductors has also been showing steady progress and as per a report incorporated by NOVONOUS, the semiconductor arena is estimated to develop from US$ 10.02 Bn in 2013 to US$ 52.58 Bn in 2020 at a Compound Annual Growth Rate (CAGR) of 26.72 percent.

One can see that the government has a keen focus on increasing the ESDM industry in India. Numerous programs have been initiated where various subsidies and other schemes have been put up on offer for setting up electronics manufacturing units in the country. The government, in consultation with the electronics and semiconductor industry, has enhanced its focus on the ESDM sector. And as per the Union Budget 2017-18, the Government of India has amplified the allotment for incentive schemes like the Electronic Development Fund (EDF) and the Modified Special Incentive Package Scheme (M-SIPS) to Rs 745 crore (US$ 111 Mn) for offering advancement to the electronics and semiconductor industry.

What is the Government Doing?

In a huge move, the Union Cabinet has allowed incentives up to Rs 10,000 crore (US$ 1.47 Bn) for investors by altering the M-SIPS scheme, to incentivize investments in the electronics sector further, generate employment openings and decrease dependency on imports by 2020. The Ministry of Electronics and Information Technology proposes to modify its policy structure, which would engage the government to take up an active responsibility in developing the sector by offering initial capital, with a plan to attract more private companies which will be able to transform India as a global semiconductor hub.

India has already started their journey towards setting up semiconductor wafer fab on commercial centers. Two consortia have begun work to enhance the same, and the proposed locations have been set up in Greater Noida in Uttar Pradesh, near New Delhi and Prantij, near Gandhinagar in Gujarat. But, there is still a cause for concern, although the semiconductor arena is developing, the home-grown start-ups in the semiconductor sector are under pressure for being unable to gather appropriate funds. The investments requisite in the semiconductor arena are usually high while the return is a long time which needs to be supported by thorough domain knowledge and preferable governmental policies which are changing now. But, funds remain a significant concern although experts suggest that the Indian Semiconductor arena is all set to grow at an unprecedented rate. It is only a wait and watch scenario where we need to see if the private companies and foreign conglomerates come forward to support the Indian semiconductor arena and what are the policies which will be able to assist the arena in growing.