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Home / UPSC Editorials / India Semiconductor Mission & Chip Manufacturing in India

India Semiconductor Mission & Chip Manufacturing in India | UPSC Editorials

Last Updated on Sep 21, 2024
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The proposal by Kaynes Semicon to establish a semiconductor manufacturing unit in Gujarat has been approved by the Union Cabinet, chaired by Prime Minister Narendra Modi with an investment of ₹3,300 crore. This will be the fifth semiconductor manufacturing plant or unit and the fourth assembly unit to receive Cabinet approval under the ambitious India Semiconductor Mission (ISM) which aims to boost chip manufacturing in India. 

With Industry 4.0, there is a huge increase in demand for chips all over the world. India with its vast domestic market and talent pool of skilled workforce can utilize the benefits of this opportune moment. The rapidly changing geopolitics and geoeconomics present India a wonderful opportunity to become the manufacturing hub of the world.

Analysis Based On

Article published in Indian Express on the approval given for setting up chip manufacturing unit under India Semiconductor Mission (ISM)

Topics for Prelims

India Semiconductor Mission, Semiconductor, Government Schemes, Acts, Legislations, Manufacturing in India, Industry

Topics for Mains

Indian Economic Development, Environment, Impact on Biodiversity, Government Initiatives

India Semiconductor Mission (ISM)

The India Semiconductor Mission (ISM) is a specialized and independent scheme to enhance domestic manufacturing of chips in India. The India Semiconductor Mission (ISM) is a very important initiative launched by the government of India to boost the semiconductor chip and fab manufacturing ecosystem in the country. Its main objective is to make India a global hub for electronics and semiconductor chips manufacturing by creating necessary infrastructure for semiconductor engineering, design, manufacturing, and research. It aims to establish a robust semiconductor and display ecosystem to position India as a global hub for electronics manufacturing and chip designing and research. 

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Key Features of India Semiconductor Mission (ISM) 

The India Semiconductor Mission (ISM) was launched in 2021 with a financial outlay of Rs. 76,000 crores under the Ministry of Electronics and IT (MeitY), Government of India. It is an initiative under a comprehensive government led program aimed at developing a robust sustainable semiconductor and display ecosystem in India. The programme apart from other provisions provides financial help to chip manufacturing companies investing in the semiconductor, display manufacturing, and design ecosystem. 

It promotes and facilitates the promotion and generation of Indigenous Intellectual Property (IP) and encourages the technology transfer. Indian Semiconductor Mission (ISM) possesses full economic and financial powers which are responsible for catalyzing the semiconductor chip manufacturing ecosystem in India that includes research, development, packaging and design. The India Semiconductor Mission (ISM) is supported by an advisory board which comprises some of the leading global experts in the business of semiconductor. India Semiconductor Mission (ISM) acts as the nodal agency or implementing agency for the schemes approved under the Semicon India Programme. 

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Key Schemes Under the India Semiconductor Mission (ISM)

These are some of key schemes under the India Semiconductor Mission (ISM):

  • Scheme for setting up Semiconductor Fabs in India. 
  • Scheme for setting up Display Fabs in India. 
  • Scheme for setting up Compound Semiconductors/Silicon Photonics/Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP)/OSAT facilities in India. 
  • Design Linked Incentive (DLI) Scheme 

Key Highlights of Semiconductor Chip Assembly Plant

The semiconductor chip manufacturing plant will have a capacity of producing more than 60 lakh chips per day. The semiconductor chips manufactured in assembly plants will be used across various sectors such as automobile industries, automotive, hybrid & electric vehicles, consumer electronics appliances, telecommunications and smartphones. This move is a very significant step towards fulfilling India's ambitions to become a major semiconductor manufacturing hub akin to some of the bigger players like the United States, Taiwan, and South Korea. 

Government Initiatives 

India Semiconductor Mission (ISM) was launched in 2021. India Semiconductor Mission (ISM) aims to establish a robust semiconductor chip manufacturing ecosystem in India. It operates autonomously under the Digital India Corporation. It has an advisory board of global experts in the field of semiconductors, chip designing, display system etc. There are other government initiatives as well:

  • Semicon India Programme: It was approved in 2021 with a financial outlay of ₹76,000 crore. This ambitious program by the government offers incentives to major as well as emerging companies in semiconductor-related sectors. It is interesting to note that it promotes sustainable development in the field of semiconductor chip manufacturing in India. 
  • Design Linked Incentive (DLI) Scheme: This scheme provides support to about 100 domestic semiconductor design companies in developing various components such as Integrated Circuits (ICs), Smartphones, Chipsets, and System on Chips (SoCs). 
  • Modified Scheme for Setting up Semiconductor Fabs: Under this, there are provisions to provide 50% fiscal support for setting up semiconductor fabs domestically as part of the flagship Semicon India program. 
  • Fiscal Support: The Government has already committed to provide ₹2,30,000 crore to position India as a global manufacturing hub in electronics with semiconductors as the cornerstone. 
  • Chips to Startup (C2S) Programme: This programme aims to train at least 85,000 engineers in Electronic System Design and Manufacturing (ESDM) over five years.

India’s Ambitions in Semiconductor Chip Manufacturing

India is making efforts to attract foreign investments in the semiconductor industry. It is focussing on significant projects like an $11 billion fabrication plant by Tata Electronics in partnership with Taiwan’s Power chip. Also, it has approved semiconductor chip assembly plants by Tatas, US-based Micron Technology and Murugappa Group’s CG Power with Japan’s Renesas. 

Also there are proposals like a ₹78,000-crore fabrication plant by Israel’s Tower Semiconductor and a ₹4,000-crore assembly plant by Zoho underscore India’s growing ambitions to establish itself as a major semiconductor hub. 

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