As India gears up for the Union Budget 2025-26, its strides in semiconductor and electronics manufacturing take center stage. Backed by government-led initiatives like the Semiconductor Programme and the Production-Linked Incentive (PLI) scheme, India is rapidly positioning itself as a global hub for semiconductor and electronic goods production. These measures aim to boost investments, foster innovation, and create substantial employment opportunities.
Semiconductor Programme: A Game Changer
The Programme for Development of Semiconductors and Display Manufacturing Ecosystem, launched in December 2021, is designed to attract global investment while strengthening India’s semiconductor sector. Key highlights include:
- Incentives for Semiconductor Companies: Financial support of up to 50% for setting up semiconductor and display fabrication units, as well as 30% fiscal support for compound semiconductor units.
- Approved Projects: Five semiconductor projects and 16 design companies have already received approval, with an anticipated investment of ₹1.52 lakh crore.
- Job Creation: The initiative is projected to generate 25,000 direct jobs and 60,000 indirect jobs, significantly contributing to the technology ecosystem.
Production-Linked Incentive (PLI) Scheme: Driving Electronics Manufacturing
The PLI scheme has emerged as a cornerstone for India’s electronics manufacturing sector, yielding impressive results:
- Production and Exports: Since its inception, the scheme has facilitated production worth ₹6.14 lakh crore and exports valued at ₹3.12 lakh crore.
- Employment Impact: Over 128,000 direct jobs have been created, further solidifying India’s reputation as a global electronics manufacturing powerhouse.
- Incentive Structure: Competitive incentives encourage semiconductor and electronics companies to expand operations within India, enhancing the domestic supply chain.
Innovative Schemes to Strengthen Semiconductor Design
- Design Linked Incentive (DLI) Scheme:
- Provides up to 50% incentives on eligible expenditures for semiconductor design companies.
- Supports advancements in Integrated Circuits (ICs), chipsets, and System on Chips (SoCs).
- Encourages indigenous capabilities in semiconductor design and innovation.
- India Semiconductor Mission (ISM):
- The ISM serves as the nodal agency for implementing semiconductor manufacturing schemes.
- Led by global experts, it focuses on developing long-term strategies for a sustainable semiconductor ecosystem.
Strategic Importance of Semiconductors
In the current geopolitical and economic landscape, semiconductors are essential to national security and technological sovereignty. By fostering a robust semiconductor ecosystem, India can:
- Reduce its dependence on imports for critical components.
- Strengthen its integration into global supply chains.
- Position itself as a trusted partner in the global semiconductor value chain.
Addressing Challenges in Electronics Manufacturing
While progress is evident, certain barriers must be addressed to unlock the full potential of India’s manufacturing sector:
- Low Net Value Addition: A significant portion of electronics production still depends on imported components.
- Lack of Foundries: The absence of indigenous semiconductor foundries limits India’s ability to produce high-value electronic goods.
Future Directions: Building a Self-Reliant Semiconductor Ecosystem
To solidify its presence in the global semiconductor industry, India must adopt a holistic approach:
- Comprehensive Supply Chain Development: Focus on chip design, testing, and packaging to create a complete ecosystem.
- Enhanced Fiscal Support: Increase government incentives and partnerships with public sector enterprises for establishing foundries.
- Collaborative Approach: Work within a trusted semiconductor network to foster innovation and ensure secure supply chains.
A Vision for Technological Leadership
India’s semiconductor and electronics manufacturing initiatives represent a transformative step towards technological self-reliance. By leveraging incentives, fostering innovation, and addressing critical challenges, the government aims to create a robust ecosystem that not only supports domestic needs but also integrates seamlessly into global supply chains. As the nation advances on this path, it lays the foundation for long-term economic growth, job creation, and technological leadership on the world stage.