Semiconductors are the backbone of modern digital technology, powering smartphones, satellites, and defense systems. To reduce import dependence, India launched the India Semiconductor Mission (ISM) in 2021 with a ₹76,000 crore outlay. This article explains the mission’s objectives, chip design ecosystem, investments, challenges, and its importance for UPSC Prelims and Mains 2025.

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Semiconductor Designers Chip In – India’s Semiconductor Push

Why in News?

• The India Semiconductor Mission (ISM), launched in 2021 with an outlay of ₹76,000 crore, has been in focus due to major investments by Tata Electronics, Micron, and global partners.

• In recent years, geopolitical tensions (China–Taiwan issue, US chip export bans, global chip shortage during COVID-19) highlighted the need for India to become self-reliant in semiconductors.

• India has seen progress in chip design startups but faces hurdles in large-scale fabrication (fabs), prompting policy reforms and international collaborations.

About Semiconductors

• Semiconductors are materials like silicon that conduct electricity under certain conditions.

• They are essential for making microchips that power smartphones, satellites, automobiles, AI, telecom, and defense systems.

• They form the foundation of digital technology and national security.

Key Points

1. Global Semiconductor Landscape

   • Dominated by Taiwan (TSMC), South Korea (Samsung), and the USA (Intel, Nvidia).

   • China is emerging as a large player, investing heavily in fabs.

2. India’s Current Role

   • Strong in chip design and R&D, with companies like Wipro, HCL, and startups like Tessolve contributing globally.

   • Weak in semiconductor fabrication, which requires massive investment and infrastructure.

3. Strategic Importance for India

   • Reduces import dependence.

   • Boosts Atmanirbhar Bharat vision.

   • Ensures resilience in defense, telecom, and AI-driven industries.

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India Semiconductor Mission (ISM) – 2021

Launched by Ministry of Electronics & IT (MeitY) with ₹76,000 crore financial outlay.

Objectives

• Long-Term Strategy: Build a sustainable semiconductor design and manufacturing ecosystem.

• Global Supply Chain Presence: Reduce dependence on imports of chemicals, gases, and machinery.

• Support to Design Startups: Provide EDA tools, foundry access, and financial support.

• Centers of Excellence: Promote advanced research and international collaborations.

• IoT & Collaborative Research: Encourage scale-based innovation and skill development.

Components

• Scheme for Semiconductor Fabs: Financial support (up to 49% government equity) to private players for fabs.

• Scheme for Display Fabs: Incentives for LCD/AMOLED display units.

• Compound Semiconductors / ATMP / OSAT: Focus on photonics, MEMS, chip testing, assembly, and packaging.

• Design Linked Incentive (DLI): Support for ICs, SoCs, chipsets, and IP Cores – managed by C-DAC.

Recent Developments

• Tata Electronics:

  • ₹91,000+ crore investment for a semiconductor fab in Dholera, Gujarat.

  • OSAT facility with daily capacity of 48 million units.

• Micron Technology: Setting up a semiconductor plant in Sanand, Gujarat (approved June 2023).

• Electronics Manufacturing Clusters (EMC 2.0): Large infrastructure projects in Telangana, Tamil Nadu, and Karnataka.

• Chips to Startup (C2S) Program: Training 85,000 engineers, developing 175 ASICs, 20 SoCs, and 30 FPGA designs in five years.

• AICTE Programs: New VLSI and IC manufacturing courses launched in 2023 to create skilled manpower.

Progress and Impact

• Investments: SPECS and PLI schemes attracted ₹50,000+ crore investments.

• Production Growth: Mobile phone manufacturing and electronics exports surged.

• Talent Development: 113 institutes engaged in semiconductor R&D under C2S.

• Strategic Positioning: India now seen as a potential global alternative to China in electronics supply chains.

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Challenges

1. High Capital Cost: Fabs require $3–4 billion per unit; current investment levels are insufficient.

2. Employment Paradox: Despite huge investments, fabs generate limited direct jobs (~1,500 per fab), raising ROI concerns.

3. Skilled Workforce Shortage: Gap in VLSI, IC design, and fabrication expertise.

4. Industry–Academia Collaboration: India ranks low globally, leading to brain drain of talent.

5. Insufficient R&D Spending: India ranks 56th globally in R&D expenditure (% of GDP).

6. Policy & Investment Uncertainty: Foxconn’s withdrawal from a joint venture exposed investor hesitation.

7. Dependence on Imports: Critical raw materials (lithium, silicon, tellurium, graphite) heavily imported, mostly from China.

8. Environmental Concerns: Chip fabs use hazardous chemicals and large amounts of water, raising ecological issues.

Way Forward

• Strengthen ISM Implementation: Faster approvals, predictable policies, and transparent governance.

• Enhance R&D: Increase public-private co-funding, reduce bureaucratic hurdles.

• Talent Development: Expand semiconductor-focused courses, industry internships, and skill-building programs.

• Raw Material Security: Diversify imports, explore domestic reserves, and build recycling capabilities.

• International Partnerships: Collaborate with Taiwan, Japan, and US companies for technology transfer.

• Green Manufacturing: Adopt eco-friendly practices to minimize environmental damage.

 

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