India’s semiconductor dreams get Centre’s push for more fab units

India’s quest for self-reliance in semiconductor space took a step ahead on Monday with the Union Cabinet approving the proposal of Kaynes Semicon Pvt Ltd to establish a semiconductor manufacturing unit in Sanand, Gujarat. Coming up at an investment of Rs. 3,300 crore, the plant is expected to significantly enhance India's semiconductor production capabilities. The new unit will have a daily production capacity of six million chips, serving a wide range of industries, including automotive, electric vehicles, consumer electronics, telecom, and mobile phones. The number of semiconductor units will now go up to four, with three in Gujarat and one in Assam. Even as US chipmaker Micron Technology is setting up India's first high-end semiconductor fabrication plant in Sanand, the Tata Group is building a semiconductor assembly and test facility in Assam. The group will also come up with a plant in Dholera, Gujarat, while, CG Power is setting up a chip plant in Sanand. These units will manufacture millions of chips, which can be used across multiple industries, reducing the country’s dependence on this critical technology.

India Electronics and Semiconductor Association (IESA)’s president Ashok Chandak has said, “IESA commends MeitY and ISM for their support in approving Kaynes' semiconductor project, marking another significant milestone in India's semiconductor journey. With upcoming initiatives from TATA, Micron, Renesas, Kaynes, and others, we are gaining momentum in developing a comprehensive semiconductor ecosystem. This will not only support the local electronics industry but also meet the anticipated global semiconductor demand, projected to reach $one trillion by 2030.”

India’s rapid moves to make the country self-reliant in semiconductor technology are definitely a welcome step because of varying reasons. Firstly, India wants to emerge as a manufacturing hub as the China+1 sentiment gathers steam across the world. Global enterprises faced severe disruption in their supply chains during the Covid-19 period. This has prompted them to diversify their supply chain. If India wants to be a manufacturing hub, especially of electronics items; its reliance on semiconductor has to be minimised. Towards achieving this, setting up semiconductor manufacturing units will be a decisive move. Secondly, India as a country has the highest young population apart from boasting of the biggest technology talent in the world. Without gainful employment to the young, the country’s dream of being a developed economy cannot be realised.

Moreover, the risks of social unrest rise without employment opportunities. Therefore, plans to promote the semiconductor industry on a large scale will not only provide direct employment to both skilled and unskilled workforce but also supplement employment opportunities in the manufacturing sector. The country has already started reaping the benefits of rising employment in electronics manufacturing industry. Last but not the least, in geopolitical context, semiconductor holds a special significance considering that India faced technology denials on several earlier occasions. From space and nuclear to healthcare, many developed economies were reluctant to share their technological knowhow with India. In this context, being self-reliant in semiconductor space provides India with the much-needed strategic autonomy to take decisions that favour its people and economy rather than succumbing to the powerful global players.