The pandemic has brought to the fore the fragility of the global supply chain of semiconductor manufacturing. The situation is exacerbated by the overdependence of the world on East Asia for fab manufacturing, the rising price of silicon, and the China-U.S. trade war. No wonder, countries are scampering to safeguard their interests by introducing attractive packages to attract more chip manufacturing.
India’s incentive to manufacturing of semiconductors
It is timely, therefore, that India has approved a $10 billion package to incentivise the manufacturing of semiconductors in the country. The government has drawn out a list of incentives to get leading international manufacturers to set up their manufacturing unit in India either by themselves or with the help of a local partner. Considering the current geopolitical dynamics and the fact that semiconductors are at the core of fourth industrial revolution technologies, this is a welcome first step.
Apart from incentivising more FDI in electronics to deepen our supply chains through incentive schemes, we need to focus on encouraging Indian manufacturers and start-ups to enter and master complex R&D and manufacturing verticals.
We can then ensure that valuable Intellectual Property is created and owned by Indian companies. 3. The semiconductor industry is changing fast as new-age technologies require innovation at the design, material, and process levels. 4. Indian engineers have contributed immensely to this area in multinational companies. 5. We must encourage them to set up their design start-ups with handsome government grants and tax incentives.
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