India Strengthens its Semiconductor Push with New Unit in Sanand

The Indian government is taking significant steps towards establishing a robust semiconductor ecosystem, with the recent approval of a new semiconductor unit in Gujarat. The initiative is part of a broader effort to position India as a global leader in semiconductor manufacturing, with ambitious plans and strategic partnerships in place.

India Approves New Semiconductor Unit in Gujarat

On September 2, 2024, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved Kaynes Semicon Pvt Ltd’s proposal to set up a semiconductor manufacturing unit in Sanand, Gujarat. The project, part of the India Semiconductor Mission (ISM), represents a major milestone in India’s semiconductor ambitions. The unit will require an investment of Rs 3,300 crore and will have the capacity to produce 60 lakh chips per day. These chips will serve various sectors, including automotive, consumer electronics, telecom, and electric vehicles.

This new unit adds to the four other semiconductor projects approved by the Union Cabinet, with the first one being sanctioned in June 2023, also located in Sanand.

India’s Policy Initiatives Supporting the Semiconductor Push

India’s drive to become a global semiconductor hub is supported by several key policy initiatives aimed at boosting local manufacturing, design, and development capabilities.

Make in India Initiative

Launched to transform India into a global center for Electronic System Design and Manufacturing (ESDM), the Make in India initiative promotes domestic manufacturing across various industries, including semiconductors.

PLI Scheme

In December 2021, the central government approved Rs 76,000 crore under the production-linked incentive (PLI) scheme to incentivize domestic manufacturing of semiconductor products. This scheme aims to make India an attractive destination for companies looking to invest in the semiconductor ecosystem.

DLI Scheme

The Design Linked Incentive (DLI) scheme provides financial incentives and infrastructure support for the design and development of semiconductor products such as Integrated Circuits (ICs), System on Chips (SoCs), and Chipsets. This initiative targets key semiconductor design stages, offering comprehensive support to local manufacturers.

Digital RISC-V (DIR-V) Program

The DIR-V program focuses on microprocessor production, with a goal of achieving industry-grade silicon production by the end of 2023. This initiative is expected to boost India’s capabilities in developing advanced semiconductor designs.

India Semiconductor Mission (ISM)

Launched in 2021 with an investment of Rs 76,000 crore, the India Semiconductor Mission (ISM) aims to create a thriving semiconductor and display manufacturing ecosystem in the country. Under the Ministry of Electronics and IT (MeitY), ISM will spearhead India’s efforts to become a global leader in electronics design and production, offering financial incentives to companies investing in the semiconductor industry.

Global Partnerships and Expanding Investments

In 2023, India signed a Memorandum of Understanding (MoU) with the European Commission to collaborate on the semiconductor supply chain and innovation. This partnership is part of the EU-India Trade and Technology Council (TTC) and underscores India’s commitment to building a global semiconductor supply chain.

Additionally, the Indian government plans to increase the funding outlay for the second phase of its chip manufacturing incentive policy to $15 billion, an increase from the $10 billion allocated in the first phase. This expansion reflects India’s intent to attract more investments and further accelerate semiconductor production.

Indian Semiconductor Market: A Growing Powerhouse

The Indian semiconductor market, valued at $23.2 billion in 2021, is expected to grow at a compound annual growth rate (CAGR) of 17.10%, reaching $80.3 billion by 2028. The design and development segment dominates the market, accounting for 80% of the total industry share. As domestic and global demand for chips rises, India’s semiconductor market is poised to become one of the largest in the world.

Conclusion

India’s strategic focus on semiconductor production, through initiatives like the India Semiconductor Mission and collaborations with international partners, positions the country to emerge as a global semiconductor hub. With increasing investment, policy support, and a growing market, India’s semiconductor industry is on the path to becoming a crucial player in the global supply chain.