GS3 – Economy
Context
India’s semiconductor landscape is witnessing swift development, mainly propelled by initiatives from the Ministry of Electronics and IT (MeitY), including the Design Linked Incentive (DLI) Scheme and the Chips to Startup (C2S) programme.
What Are Semiconductors?
Semiconductors are materials whose electrical conductivity lies between that of conductors and insulators.
They are the core components behind digital devices, playing a critical role in enabling innovations across technologies.
Key Growth Factors for Semiconductor Startups in India
- Government Schemes: Initiatives like DLI and C2S offer both financial aid and infrastructure to support design-led innovation in chipmaking.
- Rising Demand: The surge in electronics, IoT, electric vehicles, and smart appliances has increased the need for locally designed chips.
- Talent Availability: India’s strong base of skilled professionals in electronics and VLSI (Very-Large-Scale Integration) design supports the startup ecosystem.
- Private Capital: Firms such as Netrasemi and Mindgrove Technologies have successfully secured venture capital, signaling investor confidence.
- Geopolitical Advantage: Global supply chain shifts and the China+1 strategy position India as a favorable destination for semiconductor development.
Challenges Facing India’s Semiconductor Startups
- High Capital Requirement: Establishing a semiconductor fabrication unit demands multi-billion-dollar investments due to complex infrastructure needs.
- Infrastructure Challenges: Continuous access to cleanrooms, uninterrupted power, and water supply is critical for operations.
- Dependence on Imports: Essential raw materials like silicon and gallium arsenide are largely imported, increasing vulnerability.
- Environmental Concerns: The fabrication process involves hazardous substances such as arsenic, phosphorus, and antimony, raising concerns over waste disposal and health risks.
Way Forward
- Focused Incentives: Government support should emphasize design, testing, and packaging, where entry barriers are lower.
- Skill Development: Strengthen training under initiatives like Skill India and PMKVY to build a technically capable workforce.
- International Collaboration: Forge deeper partnerships with countries like Taiwan and the United States for access to cutting-edge technology and raw materials.
- Supply Chain Resilience: Reduce overreliance on imports and build a diversified and secure domestic supply network.