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    Well Begun, is half done: Anticipating India’s ‘Semiconductor’ Sway

    Union Minister for Electronics and IT Ashwini Vaishnaw on Tuesday hailed the “excellent” response from the industry for the government’s Semiconductor manufacturing initiatives. At the press conference of Nasscom’s strategic review, grouped by IT industry, Vaishnaw also exhorted the industry to “double down” on its efforts.

    Following The Union Cabinet showing a green light on December 15 on a Rs 76,000-crore scheme in lieu of promoting semiconductor and display manufacturing, there were high-spirited anticipations in the industry.

    Vaishnaw’s comments came a day after the minerals and natural resources-focused Vedanta announced a pact with contract manufacturer Foxconn on the front of the semiconductor. In the past, the Tata Group has also evinced interest in the area.

    “Very happy that within such a short time frame, the superb response has been received from the semiconductor industry participants,” Vaishnaw said. He added that there has been an “excellent response” from the industry in terms of fab or display fabrication, compound semiconductor and design ecosystem, which he said will create quality employment opportunities in the country.

    “All these are new opportunities and I request industry participants to double down on your efforts, come up with more ideas, suggestions,” he said, stressing that the government is keen for feedback and implementing the suggestions in policy for common good.

    India’s electronics market is one of the largest in the world in terms of consumption. It is likely to grow to USD 400 billion by 2025. While India is one of the largest consumers of electronic devices, it is very sad to know that every chip that is being used in those devices is being imported from elsewhere. Industry experts have been addressing the need for India to become a completely self-reliant manufacturing hub of the world.

    India and Taiwan were in talks earlier as well, but this time they both can finally come to an agreement that could lead to setting up a chip manufacturing unit in South Asia along with tariff reductions on components for producing semiconductors by the end of the year, people familiar with the matter said. This can reduce the dependency on China for countries like the USA, Japan and South Korea as well and it can also lead to diversifying crucial supply-chains networks.

    The trade talks come at a time when democracies across the world are boosting economic and military links to stand up against an increasingly assertive China. Amidst the fresh tensions between India and China, it naturally begs a very potent question how is it going to pan out for both the countries that already see themselves in a standoff? Because China is very thin-skinned when it comes to any investment coming from Taiwan.

    However, Taiwan and China don’t see eye-to-eye so there might be a difference between what comes in Taiwan and India and India and China. Taiwan has been in the Asian tigers’ framework for almost twenty years and the bilateral relations between India and Taiwan have been growing and deepening over the years.

    To boost the Indian economy, India amongst several other steps, very boldly invited the world’s top chip players to set up their foundries in the motherland. However, there has been a sentiment of over-optimism going around as this is one of the several times in the last decade when this bubble has appeared. But, Things might be pointing towards a bull’s eye this time.

    There is a very strong and clear structured mandate from the current government which is backing the semiconductor manufacturing ecosystem in India this time and that is why there is no cloud of false optimism around this time that there will be a platform and a pathway for industries to perform and excel.

    The semiconductor market and its adjoining supply chain are predominantly running the world and that has been disrupted. Does India have the capability to become one of the epicentres of global chip manufacturing?

    As far as the Vedanta- Foxconn deal is concerned, we all should be elated by both Indian companies as well as Taiwanese companies coming together. We should also consider the fact that Foxconn does not have Silicon CMOS technology. What it has are component manufacturing as well as silicon carbide which falls under compound semiconductors. To get access to the top-shelf material, i.e., silicon CMOS, we might still need another partner.

    However, this news indeed would account for a great start for the industry. Setting up a semiconductor foundry in the homeland can be the horse on which India can ride straight into the 5 trillion dollar economy fields.

    Mayank Vashisht | Sub Editor | Mayank Vashisht

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