It is well known that only a small number of nations, including Taiwan, China, South Korea, Singapore, Hong Kong, Thailand, and Vietnam, produce the vast bulk of the world’s chips and semiconductors. In addition to the apparent disadvantages of monopoly and overdependence on a small number of countries, it also jeopardises the interests of the entire world’s population.
While some are able to deal in excesses of these chips, often serving as middlemen, many distant countries must pay a high price. To usher in a new era of electronics manufacture and have easy access to chips generally, a number of nations have recently been aggressively trying to entice businesses into manufacturing the same on their soil.
According to projections, India’s market size will increase from $15 billion in 2020 to $63 billion in 2026 as a result of rising demand and applications in consumer and automotive communications, wireless communication, etc.
India has advanced quickly in the manufacturing and semiconductor industries over the past few years as part of its determination to become independent of the brittle supply chain for semiconductors coming from China, Taiwan, and a select few other nations. It is crucial to lessen the country’s reliance on a foreign power for semiconductors and chips given the strategic interests at stake with this commodity.
The world has ample evidence of how quickly the situation can turn into a supply chain disaster of enormous proportions, with the ability to completely choke the suppliers and the big consumers like India, thanks to the recent escalation of tensions between China and Taiwan as well as the crisis during the Covid-19 pandemic.
In this perspective, the announcement of a $19.5 billion agreement for semiconductor manufacturing units in Gujarat by the Indian natural resources behemoth Vedanta in partnership with Taiwanese manufacturing giant Foxconn is welcome news.
On a 1000-acre plot of land in the Ahmedabad area, the 60:40 joint venture between Vedanta and Foxconn will build a semiconductor fabrication unit, a display fabrication unit, and a semiconductor assembling and testing unit.
Once this plant is operational, India will join the select group of only five countries that can produce glass and semiconductors. It is a truly revolutionary move that has the potential to completely change the Indian electronics market and lower prices for Indian customers.
Semiconductor chips are essential components of many digital consumer goods, including computers, ATM cards, and automobiles. A smart television, mobile device, laptop, and other electronic devices are now accessible to every Indian. Additionally, this one action has the potential to build a sizable ecosystem for India’s supporting sectors. Interesting estimations and surveys forecast that the Ministry of Micro, Small & Medium Enterprises (MSME) sector as a whole will increase by a factor of four and generate income of about $100 billion.
This enormous undertaking has the potential to raise the standard of living for at least 1 lakh people and establish India as a leader in the silicon industry. The firm expects to begin producing display and chip goods in two years, while being quite daring and ambitious in its goals.
It is obvious that in order to carry out such a massive operation, the private sector needs to collaborate closely with the state governments in order to effectively utilise the high-tech clusters with the necessary infrastructure, land, semiconductor grain water, electricity, etc.
While it is obvious that only active government support can help with the construction of a semiconductor factory, the Indian government’s recent pledge to increase incentives beyond $10 billion for those investing in the industry shows that India is serious about joining the top players in the world’s chip and semiconductor supply chain.
The Government of India has guaranteed that our indigenous semiconductor industry has been given enough of a shoulder to lean on so that it can lead us out of a supply chain breakdown/logjam when necessary by refocusing on research and development in this area. This initiative to make India a significant manufacturing hub with an entrepreneur-friendly ecosystem will play a significant role in innovation and give India a real chance to become a global hub for semiconductor manufacturing as well as a supplier of affordable electronics to its domestic consumers in line with the principles of Self-Reliant India.
The country is on the verge of escaping the monopolised global chip manufacturing business as a result of these audacious policy choices in the electronics sector. By improving its infrastructure, India is certain to eventually become a major producer of semiconductors and chips, becoming a centre for cutting-edge innovation and research in the process.