INDIA’S SEMICONDUCTOR AND ELECTRONICS MANUFACTURING INITIATIVES

GS2 – GOVERNANCE 

India has made significant progress in the semiconductor and electronics manufacturing sectors, with the Union Budget 2025-26 expected to further bolster these initiatives. The Union Finance Ministry has highlighted the success of various government policies aimed at attracting investments and creating jobs in these industries.

Semiconductor Programme Overview

• Programme Objective: Develop a sustainable semiconductor and display manufacturing ecosystem.
• Launch: December 2021 under the Semicon India Programme.
• Achievements:
  • Approval of 5 semiconductor projects and support for 16 design companies.
  • Expected investments of ₹1.52 lakh crore.
  • Creation of approximately 25,000 direct jobs and 60,000 indirect jobs.

Production-Linked Incentive (PLI) Scheme

• Performance:
  • Electronics production worth ₹6.14 lakh crore.
  • Exports of ₹3.12 lakh crore.
  • Creation of 128,000 direct jobs in the electronics sector.
• Incentives: Competitive support for companies in semiconductor and electronics manufacturing to position India as a global hub.

Incentives for Semiconductor Manufacturing

• Fiscal Support:
  • Up to 50% of the cost for setting up semiconductor and display fabrication units.
  • 30% fiscal support for capital expenditure in compound semiconductor units.
• Infrastructure Development: Collaborations with states to create high-tech clusters.

Design Linked Incentive (DLI) Scheme

• Support: Up to 50% incentives on eligible expenditures for semiconductor design companies.
• Focus Areas:
  • Integrated Circuits (ICs).
  • Chipsets.
  • System on Chips (SoCs).
• Objective: Boost domestic capabilities in semiconductor design and innovation.

India Semiconductor Mission (ISM)

• Purpose: Drive long-term strategies for building a sustainable semiconductor ecosystem.
• Leadership: Global experts will manage ISM to ensure efficient implementation of semiconductor and display manufacturing schemes.

Strategic Importance of Semiconductors

• National Security: Essential for secure communications and defence technologies.
• Economic Stability: Crucial for enhancing self-reliance and integrating into global supply chains.

Challenges in the Electronics Sector

• Low Net Value Addition: Heavy reliance on imported components.
• Limited Indigenous Foundries: Absence of critical infrastructure for semiconductor fabrication.
• Dependence on Imports: Critical barriers to achieving full potential in manufacturing.

Future Directions for India’s Semiconductor Industry

1. Strengthen the Supply Chain: Focus on design, testing, and packaging.
2. Increase Fiscal Support: Enhance incentives to attract global players.
3. Leverage Public Sector Enterprises: Encourage their involvement in establishing semiconductor foundries.
4. Collaborative Approach: Build a trusted semiconductor ecosystem in partnership with global and domestic stakeholders.