By Prof Y Siva Sankar
Professor of Practice, Department of Electronics and Communication Engineering
The time is right to hop onto the semiconductor bandwagon in India as the semiconductor industry in India is still in its early stages and poised for huge growth compared to some of the other major players in the global semiconductor market, such as the United States, South Korea, Japan, Taiwan, and China. The industry has been growing rapidly in recent years and is expected to play an increasingly important role in the global semiconductor ecosystem in the coming years.
According to a report by the India Electronics and Semiconductor Association (IESA), the Indian semiconductor industry was valued at approximately $36 billion in 2020. This includes the sales of integrated circuits (ICs), diodes, transistors, and other semiconductor products. The industry is expected to grow at a compound annual growth rate (CAGR) of around 22% between 2020 and 2025, reaching a value of $84 billion by 2025.
According to a report by Research and Markets, the global semiconductor market was valued at $464.1 billion in 2020 and is expected to reach $804.3 billion by 2026, growing at a CAGR of 9.3% between 2021 and 2026. The report highlights that the Asia-Pacific region, which includes India, is the largest market for semiconductors, accounting for over 50% of the global market share.
India’s semiconductor industry is expected to benefit from the global growth in demand for semiconductors, driven by the increasing adoption of technologies such as 5G, artificial intelligence, and the Internet of Things (IoT) in various industries. In addition, India is a major consumer of semiconductor products, but most of these products are imported. The Indian government has recognized the potential of the semiconductor industry and has taken several steps to promote its growth in the country.
Some of the key initiatives are:
- Make in India: The Make in India initiative, launched in 2014, aims to promote India as a global manufacturing hub by providing various incentives and reducing the regulatory burden on businesses. The initiative aims to increase the share of manufacturing in India’s GDP from 16% to 25% by 2025.
- National Policy on Electronics: The National Policy on Electronics (NPE) was launched in 2019 to promote the domestic manufacturing of electronic products and increase the value added in the electronics sector. The policy aims to create a conducive environment for the industry and attract foreign investment in the sector.
- Electronics Development Fund: The Electronics Development Fund (EDF) was set up in 2012 to financially support domestic companies involved in electronics design and manufacturing. The fund provides seed capital, venture capital, and debt financing to eligible companies.
- Modified Special Incentive Package Scheme: The Modified Special Incentive Package Scheme (M-SIPS) was launched in 2012 to provide capital subsidies to domestic companies to set up new electronics manufacturing units or expand existing ones. The scheme also includes reimbursement of central and state taxes and duties.
- Electronic Manufacturing Clusters: The government has set up Electronic Manufacturing Clusters (EMCs) across the country to provide world-class infrastructure and facilities to domestic and foreign companies for electronics manufacturing. The EMCs offer various incentives to eligible companies, such as tax exemptions, subsidies, and reimbursements.
Another significant step taken by the government is establishing a semiconductor wafer fab manufacturing facility in India. In 2020, the government announced the setting up of a Rs 6,900-crore ($941 million) semiconductor wafer fab manufacturing facility in Prayagraj, Uttar Pradesh. This facility is expected to boost the country’s semiconductor manufacturing capabilities and reduce its deep import dependence furthermore; several leading semiconductor companies have established their research and development (R&D) centres in India, taking advantage of the country’s vast talent pool and cost-effective workforce. These R&D centres are involved in developing cutting-edge semiconductor technologies and designing chips for various applications. These companies include Intel, Qualcomm, Samsung, Texas Instruments, and Broadcom.