The government of India is planning to create a large, $10.8-$11 billion fund for boosting semiconductor manufacturing domestically. This funding initiative is expected to come out within the next 2-3 months. The project is intended to improve the capacity of India in the areas of chip design and manufacturing and for developing semiconductors’ related Supply Chains.
The proposed large fund will provide assistance through support and subsidy programs for semiconductor companies and also helps with India’s other objective of providing support to the electronics industry so that it can develop a more self-sufficient system and therefore reduce dependence on imported semiconductors.
As demand for semiconductors continues to grow rapidly, as almost all products, including computers, smartphones and defence equipment are powered by chips the proposed fund should provide the means to establish an increased share of India’s production within the Global Semiconductor Supply Chain.
Additionally, this manufacturing initiative supports the broader objective of the government led by Prime Minister Narendra Modi to make India a leader in Global Manufacturing, as well as providing assistance with increasing the amount of electronics being manufactured by multiple International Corporations in India.
Subsidies for Design, Equipment and Supply Chains
The main focus of this new semiconductor fund includes three significant parts of the semiconductor ecosystem:
- Chip Design Projects
- Advanced Manufacturing Equipment and
- Development of the local Supply Chain.
The items listed in the three parts listed above make up a complete semiconductor industry, vs. depending on imported technologies and components.
Industry experts point out that developing a strong supply chain from raw materials and equipment to testing and packaging is critical for large-scale chip production long term. The proposed programs are aimed at encouraging the creation of domestic suppliers and/or attracting global suppliers to India to establish production facilities in India.
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An approach to strengthen India’s semiconductor industry
Building on prior semiconductor initiatives, the new semiconductor fund will build on prior government initiatives, such as the India Semiconductor Mission to promote chip fabrication, design, and electronics manufacturing. To attract domestic and international investment in the semiconductor industry, the government has previously launched incentive programs to support current and future semiconductor projects.
Prior programs included subsidies and financial assistance for the construction of semiconductor fabrication facilities and infrastructure associated with their manufacture and, thus, building a broader ecosystem for semiconductor manufacturing in India.
India Joins Global Semiconductor Race
The Indian government’s anticipation of investments reflects a larger worldwide trend towards increasing investments in semiconductor technology by governments worldwide, in order to safeguard supply chains and gain technological autonomy from foreign suppliers of semiconductors (globe).
Major countries including the US, China, and South Korea, have announced special funding programs for state-level investment in their respective countries’ semiconductor production capabilities.
India’s semiconductor sector remains in an early development stage, but government officials believe that if India’s semiconductor sector is to accelerate its growth and become a significant global supplier by the end of the 21st century, the new fund announced by Indian Prime Minister Narendra Modi should help.
