India's ambitious efforts to become a key player in the global semiconductor supply chain are moving into a new chapter with the second phase of the India Semiconductor Mission (ISM).
Launched to establish India as a global hub for electronics manufacturing, ISM has positioned the country to reduce its reliance on imported chips while meeting the demands of its growing tech and manufacturing sectors.
The second phase signifies a deeper commitment to transforming India into a semiconductor powerhouse.
The first phase of the India Semiconductor Mission, launched in 2021, marked the beginning of India's journey into semiconductor manufacturing.
With a budget of Rs 76,000 crore (approximately $10 billion), the Indian government aimed to attract investments in setting up semiconductor fabs and developing the necessary infrastructure.
This phase mainly focused on:
Incentivising chip manufacturing: The Government of India offered financial incentives to encourage domestic and international companies to set up semiconductor fabs and display fabs in India.
Major global firms, including Foxconn, Vedanta, and Micron Technology, expressed interest.
Building the ecosystem: Alongside manufacturing, the mission focused on building a complete semiconductor ecosystem, from design and production to testing and packaging.
The establishment of design centres and partnerships with educational institutions played a critical role in preparing India’s talent pool for this advanced industry.
Strengthening the supply chain: The first phase also worked to strengthen India’s supply chain for critical raw materials, ensuring a stable and secure flow of resources necessary for semiconductor manufacturing.
Now, the second phase of the India Semiconductor Mission moves beyond laying the groundwork to scaling up production and fostering innovation.
This phase is marked by more aggressive steps toward realising India’s long-term semiconductor goals.
Some of the key focus areas of ISM's second phase are:
Establishing advanced semiconductor fabs: While the first phase helped secure commitments from major players, the second phase aims to accelerate the construction and operationalisation of semiconductor fabrication plants (fabs).
These fabs are critical for producing integrated circuits (ICs) and other essential components for electronics.
The government has focused on providing further support in terms of land, utilities, and infrastructure to ensure the successful execution of these projects.
Development of indigenous capabilities: Phase two aims to boost domestic capabilities in chip design and semiconductor R&D.
India already has a strong talent pool of engineers working in semiconductor design for global firms, and the second phase focuses on leveraging this expertise to create homegrown semiconductor technologies.
This includes encouraging fabless design companies to innovate in India and reducing dependence on foreign technology.
Collaboration with global players: India is strategically positioning itself as a reliable partner in the global semiconductor supply chain.
The second phase emphasises collaboration with countries that have established semiconductor industries, such as the United States, Taiwan, Japan, and South Korea.
Through these partnerships, India aims to acquire critical technologies, gain expertise, and attract investments in both manufacturing and R&D.
Strengthening infrastructure and talent: The Narendra Modi government continues to invest in infrastructure development, including creating semiconductor clusters and establishing cutting-edge research and development centres.
Additionally, skilling initiatives aimed at developing a highly trained workforce are ramping up.
These initiatives include collaborations with top engineering institutions to create specialised programs in semiconductor design and manufacturing.
Boosting innovation and startups: The second phase prioritises innovation by fostering a vibrant startup ecosystem in semiconductor design and development.
The Semiconductor Design-Linked Incentive (DLI) scheme provides funding and mentorship to startups working on semiconductor technologies, helping them bring their products to market.
This phase focuses on expanding innovation centres and incubators that support emerging companies in this field.
Security of supply chain and geopolitical considerations: As geopolitical tensions and supply chain disruptions impact the global semiconductor industry, India is focusing on supply chain resilience.
By securing long-term deals with material suppliers and enhancing its domestic production capabilities, India aims to reduce vulnerabilities to global shocks.
Additionally, the country is working on creating a stable environment for semiconductor manufacturing by addressing geopolitical risks through strategic partnerships.
Sustainability and green manufacturing: The second phase also emphasises making India’s semiconductor industry more environmentally sustainable.
Producing semiconductors is resource-intensive, and the government is investing in green technologies to minimise the environmental impact of manufacturing.
This includes using renewable energy, recycling water used in fabs, and reducing semiconductor production's carbon footprint.
While the second phase of the India Semiconductor Mission holds great promise, it is not without challenges.
The global semiconductor industry is highly competitive, with countries like China, the United States, South Korea, and Taiwan dominating the market.
According to experts in the sector, India will need to overcome challenges related to high capital expenditure, technological expertise, and supply chain bottlenecks.
However, the opportunities are vast. India is a lucrative market because of the increasing demand for semiconductors in sectors like automobiles, electronics, telecommunications, and defence.
The rise of 5G, artificial intelligence (AI), and Internet of Things (IoT) technologies further boosts the demand for semiconductors, positioning India as a key player in these fields.
India’s semiconductor push, now entering its second phase, represents a strategic shift towards achieving self-reliance in critical technologies and becoming a global hub for semiconductor manufacturing.
With the government’s continued support, increased investment in R&D, and collaboration with international partners, India is on a clear path to establishing itself as a significant player in the global semiconductor industry.
The second phase of the India Semiconductor Mission aims to meet the country's growing demand for chips and position India as an exporter of semiconductors, contributing to the global supply chain and boosting the nation's economy.
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