Background
Semiconductors are essential components of smartphones, computers, automobiles, defence systems, telecommunications, artificial intelligence and industrial equipment.
The COVID-19 pandemic and subsequent geopolitical tensions exposed vulnerabilities in global semiconductor supply chains.
India has therefore sought to develop a domestic semiconductor ecosystem and reduce dependence on concentrated global manufacturing hubs.
The India Semiconductor Mission (ISM) was established to implement the country's semiconductor programme.
ISM 2.0 seeks to deepen India's capabilities across the semiconductor value chain.
India is also seeking to leverage its strengths in IT services, chip design, engineering talent and a large electronics market.
Features
India Semiconductor Mission 2.0
ISM 2.0 has an outlay of ₹1.27 lakh crore.
It aims to strengthen India's semiconductor ecosystem beyond merely establishing fabrication plants.
Complete Semiconductor Ecosystem
India is attempting to develop capabilities in:
Chip design
Semiconductor manufacturing
Assembly, testing and packaging
Semiconductor equipment
Materials
Research and development
Chip Design Start-ups
The government intends to support at least 200 start-ups and firms under the chip-design pillar of ISM 2.0.
This is intended to expand India's indigenous semiconductor design capabilities.
Skilled Workforce
More than 1 lakh technicians are planned to be trained over the next five years.
The objective is to create a workforce capable of directly supporting semiconductor and electronics manufacturing facilities.
Global Investment
Applied Materials announced plans to invest $5 billion over five years to expand its R&D centre and supply chain in India.
Micron has commenced commercial production at its Sanand facility in Gujarat.
Infineon has also highlighted India's growing importance as a semiconductor market and talent base.
Global Supply-Chain Resilience
India is positioning itself as an additional manufacturing and technology base to make global semiconductor supply chains more diversified and resilient.
Significance for India
Economic
Can attract large-scale foreign investment.
May increase India's share in global electronics manufacturing.
Can generate skilled and semi-skilled employment.
Technological
Encourages domestic chip design and semiconductor capabilities.
Can strengthen India's position in advanced electronics and emerging technologies such as AI.
Strategic
Semiconductors have applications in defence, telecommunications, space and critical infrastructure.
Domestic capabilities can reduce vulnerabilities arising from excessive dependence on external suppliers.
Export Potential
A developed semiconductor ecosystem could enable India to become an important supplier of chips, components and electronics to global markets.
Challenges
High Capital Requirements
Semiconductor fabrication plants require enormous investments, sophisticated infrastructure and long gestation periods.
Technological Complexity
Chip manufacturing requires advanced technologies, specialised equipment, ultra-pure materials and stringent quality control.
Skilled-Manpower Gap
Training technicians is important, but India also needs highly specialised semiconductor engineers, researchers and process experts.
Global Competition
India faces competition from established semiconductor ecosystems in Taiwan, South Korea, the United States, Japan and China, among others.
Supply-Chain Dependence
Even domestic manufacturing may continue to depend on imported equipment, materials, specialised chemicals and technologies.
Water and Power Requirements
Semiconductor fabrication requires highly reliable electricity and large quantities of ultra-pure water, creating infrastructure and environmental challenges.
Way Forward
Implement ISM 2.0 efficiently with predictable policy support.
Develop the entire value chain rather than focusing only on fabrication.
Strengthen semiconductor R&D and indigenous chip design.
Expand industry–university collaboration and specialised training.
Develop semiconductor clusters with reliable power, water, logistics and testing infrastructure.
Encourage domestic production of equipment, materials and specialised components.
Attract global companies while simultaneously developing Indian semiconductor firms and start-ups.
Build diversified international partnerships to improve supply-chain resilience.
Ensure environmental sustainability through efficient water use, recycling and clean-energy adoption.
Conclusion
The Indian strategy for semiconductors is thus a step taken by India in order to go from being merely a market and a design base to being a more complete player within the semiconductor value chain. The success of ISM 2.0 depends upon investment, technology, skilled manpower, and integration with the global supply chains. It can help the economic development and the strategic strength of India.
