India is positioning itself as a potential manufacturing hub in the global semiconductor industry, seeking to attract investments and partnerships that could diversify the supply chain and reduce reliance on traditional manufacturing powerhouses such as China, Taiwan, and the United States. This initiative comes at a time when the global semiconductor market is experiencing unprecedented demand, driven by advancements in technology, including artificial intelligence, 5G telecommunications, and electric vehicles.
The Indian government has launched several initiatives aimed at fostering a conducive environment for semiconductor manufacturing. In December 2021, the Indian Ministry of Electronics and Information Technology announced a $10 billion incentive program to promote semiconductor and display manufacturing in the country. This program is part of a broader strategy to enhance India’s position in the global electronics supply chain and to create a self-reliant economy, often referred to as “Atmanirbhar Bharat.”
India’s ambitions in the semiconductor sector are underscored by its large domestic market, which is expected to grow significantly in the coming years. According to a report by the India Electronics and Semiconductor Association (IESA), the Indian semiconductor market is projected to reach $64 billion by 2026, driven by increasing demand for consumer electronics, automotive applications, and industrial automation. This growth presents a compelling case for global semiconductor companies to consider India as a viable manufacturing destination.
The geopolitical landscape has also played a crucial role in India’s semiconductor strategy. The COVID-19 pandemic exposed vulnerabilities in global supply chains, particularly in the semiconductor sector, which faced significant disruptions. As a result, countries like the United States have intensified efforts to bring semiconductor manufacturing back to their shores, while also seeking to establish partnerships with allied nations. The U.S. CHIPS Act, passed in August 2022, allocated $52 billion to incentivize domestic semiconductor manufacturing and research. This has created opportunities for collaboration between the U.S. and India, as both nations seek to bolster their semiconductor capabilities.
In addition to U.S. support, India has been actively engaging with Taiwan, a global leader in semiconductor manufacturing, particularly through companies like Taiwan Semiconductor Manufacturing Company (TSMC). TSMC has expressed interest in exploring opportunities in India, which could lead to technology transfer and skill development in the Indian workforce. Furthermore, India is also in discussions with South Korean companies, such as Samsung, which has already established a semiconductor manufacturing facility in the country.
The Indian government has identified several key regions for semiconductor manufacturing, including Karnataka, Tamil Nadu, and Uttar Pradesh. These states have been proactive in creating favorable policies and infrastructure to attract investments. For instance, Karnataka has established a dedicated semiconductor policy that offers incentives for companies setting up manufacturing units in the state. Similarly, Tamil Nadu has announced plans to develop a semiconductor park to facilitate the growth of the industry.
Despite these efforts, challenges remain for India in its quest to become a global semiconductor manufacturing hub. The semiconductor industry is capital-intensive and requires significant investments in research and development, as well as advanced manufacturing facilities. India currently lacks the necessary infrastructure and ecosystem that countries like Taiwan and South Korea have developed over decades. Additionally, the country faces competition from other emerging markets, such as Vietnam and Malaysia, which are also vying for semiconductor investments.
Moreover, the Indian workforce will require extensive training to meet the technical demands of semiconductor manufacturing. While India has a large pool of engineers and technical professionals, the specific skills needed for semiconductor fabrication are not widely available. The government and industry stakeholders will need to invest in education and training programs to bridge this skills gap.
The implications of India’s push into the semiconductor sector are significant. A successful transition to a manufacturing hub could enhance India’s economic resilience, create high-skilled jobs, and contribute to the country’s overall technological advancement. Furthermore, it could help mitigate the risks associated with over-reliance on a single country for critical components, thereby strengthening global supply chains.
As India continues to navigate its ambitions in the semiconductor industry, the coming years will be crucial in determining whether it can establish itself as a competitive player alongside established leaders like the U.S., Taiwan, and China. The outcome will not only shape India’s economic landscape but also influence the dynamics of the global semiconductor market.
