India Semiconductor Mission : A Comprehensive Overview

Source:

1. PIB

2. Indian Semiconductor Mission

        The India Semiconductor Mission (ISM) is a specialised and autonomous Business Division operating under the Digital India Corporation under the Ministry of Electronics and Information technology. 

"Its primary objective is to establish a thriving semiconductor and display ecosystem to position India as a prominent global center for electronics manufacturing and design".

    ISM possesses full administrative and financial authority and is dedicated to accelerating the growth of the semiconductor ecosystem in India, encompassing manufacturing, packaging, and design. An advisory board composed of renowned global experts in the semiconductor industry provides guidance to ISM. As the nodal agency, ISM is responsible for the efficient and coherent implementation of programs aimed at fostering the development of India's semiconductor and manufacturing ecosystem.

Objectives of ISM :

The objectives of ISM are as follows:

• Develop a comprehensive long-term strategy, in consultation with government ministries, departments, industry, and academia, to foster sustainable semiconductor and display manufacturing facilities and a robust semiconductor design ecosystem in the country.

• Facilitate the adoption of secure microelectronics and establish a trusted semiconductor supply chain, encompassing raw materials, specialty chemicals, gases, and manufacturing equipment.

• Support the exponential growth of the Indian semiconductor design industry by providing essential assistance, such as Electronic Design Automation (EDA) tools, foundry services, and other suitable mechanisms, particularly for early-stage startups.

• Promote and facilitate the creation of indigenous Intellectual Property (IP) in the semiconductor domain.

• Encourage, enable, and incentives the Transfer of Technologies (ToT) to enhance domestic capabilities.

• Establish effective mechanisms to leverage economies of scale within the Indian semiconductor and display industry.

• Foster cutting-edge research in the semiconductor and display industry, including advancements in evolutionary and revolutionary technologies, through grants, global collaborations, and other initiatives in academic and research institutions, as well as the industry. This includes the establishment of Centers of Excellence (CoEs).

• Facilitate collaborations and partnership programs with national and international agencies, industries, and institutions to catalyse collaborative research, commercialisation, and skill development in the semiconductor sector.

Semiconductors : Semiconductors are a class of crystalline solids that exhibit electrical conductivity levels between those of conductors (highly conductive materials) and insulators (poor conductors).  They play a crucial role in the manufacture of various electronic devices such as diodes, transistors, and integrated circuits.  Semiconductors can also be utilised as discrete components in power devices, optical sensors, and light emitters, including solid-state lasers. These electronic components have become widely used due to their compact size, reliability, energy efficiency, and cost-effectiveness. To modify the electrical properties of pure semiconductors, a process called doping is employed. This involves adding small amounts of impurities to the material, which significantly alters its conductivity and enables precise control over its electrical behaviour.

Schemes Under ISM :

Under the aforementioned programme, four schemes have been introduced to attract investments and strengthen the electronics manufacturing ecosystem in India:

1. 'Modified Scheme for setting up of Semiconductor Fabs in India': 

• This scheme aims to encourage the establishment of semiconductor wafer fabrication facilities in the country. 

• It offers fiscal support of 50% of the project cost on a pari-passu basis for setting up Silicon CMOS based Semiconductor Fab in India.

2. 'Modified Scheme for setting up of Display Fabs in India': 

• This scheme aims to attract investments in manufacturing TFT LCD or AMOLED based display panels in India. 

• It provides fiscal support of 50% of the Project Cost on a pari-passu basis for setting up Display Fabs in the country.

3. 'Modified Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab / Discrete Semiconductors Fab and Semiconductor Assembly, Testing, Marking, and Packaging (ATMP) / OSAT facilities in India': 

• This scheme extends fiscal support of 50% of the Capital Expenditure on a pari-passu basis for setting up Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab/ Discrete Semiconductor Fab and Semiconductor ATMP / OSAT facilities in India.

4. 'Semicon India Future Design: Design Linked Incentive (DLI) Scheme': 

• This scheme offers financial incentives and design infrastructure support for the development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores, and semiconductor-linked design.

• It provides a "Product Design Linked Incentive" of up to 50% of the eligible expenditure, subject to a ceiling of ₹15 Crore per application, and a "Deployment Linked Incentive" of 6% to 4% of net sales turnover over 5 years, subject to a ceiling of ₹30 Crore per application.

"Pari passu" is a Latin term that translates to "on equal footing" or "at an equal pace."  In financial and legal contexts, it is used to describe a situation where two or more parties have equal rights, privileges, or claims in a particular matter.  When assets or obligations are ranked "pari passu," it means they are treated equally without any preference or priority given to one over the other.         In the context of the schemes mentioned above, "fiscal support of 50% of the project cost on pari-passu basis" means that the government provides financial assistance to the eligible projects, and this assistance is provided equally, without favouring one project over another. All projects that meet the criteria receive the same level of financial support, treating them on an equal footing.

Significance of Indian Semiconductor Mission:

        The Indian Semiconductor Mission (ISM) holds immense significance as it aims to establish a organised and focused approach to promote the semiconductor and display industry in India comprehensively. This strategic mission is expected to:

• Develop a Long-Term Strategy: ISM will formulate a comprehensive long-term strategy for nurturing semiconductor and display manufacturing facilities as well as fostering a robust semiconductor design ecosystem within the country.

• Ensure Trusted Electronics: By facilitating secure semiconductor and display supply chains, including raw materials, specialty chemicals, gasses, and manufacturing equipment, ISM will promote the adoption of trusted electronics.

• Boost Semiconductor Design Industry: Early-stage startups in the semiconductor design industry will receive crucial support through access to Electronic Design Automation (EDA) tools, foundry services, and other appropriate mechanisms, leading to significant growth opportunities.

• Foster Indigenous Intellectual Property (IP): ISM will encourage, enable, and incentivise the generation of indigenous Intellectual Property (IP) and also promote the transfer of technologies to bolster technological capabilities within the country.

• Foster Collaborations and Partnerships: By fostering collaborations and partnership programs with national and international agencies, industries, and institutions, ISM will accelerate collaborative research, commercialisation, and skill development in the semiconductor sector.

Status of Semiconductor Industry in India:

• As of 2022, the Indian semiconductor industry had reached a value of US$27 billion. However, it faced a considerable challenge as over 90% of the semiconductor chips were imported, leading to a heavy reliance on external sources for Indian chip consumers.

• The Department of Electronics and Information Technology (DeitY) reported that India was making progress in the design sector, with approximately 2,000 chips being developed domestically each year. Moreover, the industry saw the active involvement of more than 20,000 engineers working on various aspects of chip design and verification.

• Experts from Deloitte have predicted that the Indian semiconductor market is projected to grow significantly, reaching an estimated value of USD 55 billion by 2026. This growth is expected to be primarily driven by three key industries: smartphones and wearables, automotive components, and computing and data storage sectors. These industries are anticipated to account for more than 60% of the market's expansion over the forecasted period.

Need to Promote Semiconductor Industry In India :

The semiconductor industry is the bedrock of modern electronics and plays a pivotal role in powering the next phase of digital transformation under Industry 4.0. India has a unique opportunity to establish itself as a significant player in the global semiconductor market, leveraging its demographic dividend and abundant cheap labor.

Investing in Skilled Workforce and Infrastructure

• To achieve success, India must focus on strategic investments in technical education, research, development, and infrastructure. 
• By nurturing a skilled workforce and providing state-of-the-art facilities, the country can foster innovation and drive the growth of the semiconductor sector. 
• This will reduce India's dependence on semiconductor imports and lead to technological self-sufficiency.

Semiconductors: Backbone of Modern Technology

• Semiconductors power essential electronic gadgets and devices across various sectors, including communication, health, entertainment, and logistics. 
• Additionally, increasing demand for semiconductors due to the rise of electric vehicles presents a promising future for the industry, with the Indian semiconductor market expected to reach US$55 billion by 2026.

Seizing Opportunities Amidst Pandemic

• The Covid-19 pandemic has further emphasised the need for electronic gadgets, contributing to an ever-increasing demand for semiconductors. 
• Hence, early investment and development in the semiconductor industry are critical.

Tapping into India's Vast Market Potential

• India's large tech-savvy population offers an enormous market for semiconductors. Reports predict a substantial increase in India's semiconductor consumption, reaching USD 55 billion by 2026 and USD 110 billion by 2030.

Economic Benefits and Global Investments

Supporting and promoting the semiconductor industry in India will yield multiple benefits, including job creation, technological advancement, and economic growth. 

By creating an enabling environment for semiconductor companies, India can attract global investments and nurture innovation, propelling the nation to play a vital role in shaping the future of technology.

Challenges Faced By the Semiconductor Industry in India

• Insufficient Infrastructure: One of the significant challenges in the Indian semiconductor industry is the lack of adequate infrastructure, including fabs, test and assembly facilities, and research and development centers. The establishment of such infrastructure demands substantial investment, and to attract private investments, the government needs to offer attractive incentives.

• Skilled Workforce Shortage: The semiconductor industry requires highly specialised and skilled professionals. India must invest in nurturing talent in chip design, manufacturing, and testing. Encouraging partnerships between academia and the industry to provide specialised training to students and professionals can help address this issue.

• High Operational Costs: Establishing semiconductor manufacturing units involves considerable expenses, and India's high costs of land, power, and labor make it less appealing to investors. To enhance India's attractiveness for semiconductor manufacturing, the government should consider providing tax incentives and subsidies.

• Intellectual Property Rights Protection: The protection of intellectual property rights is crucial for the growth and development of the semiconductor industry. The Indian government must focus on strengthening the legal framework for IP protection and enforcement.

• Dependency on Imported Raw Materials: Semiconductor fabrication requires specific raw materials like silicon, germanium, gallium arsenide, chemicals, and gases, most of which need to be imported. Ensuring a steady and reliable supply of these raw materials is essential for the industry's stability and growth.

        Embracing the opportunity to promote the semiconductor industry will position India as a key player in the global market, ensuring long-term success and prosperity for the nation. By driving digital transformation and economic growth, India can solidify its position in the semiconductor sector and emerge as a force to be reckoned with on the global stage.