Article 2: Promise of chips
Why in news: The Union Cabinet approved the second phase of the India Semiconductor Mission (ISM) with a ₹1.27 lakh croreoutlay to strengthen semiconductor manufacturing, boost self-reliance, and enhance India's strategic position in global electronics supply chains.
Key Details
- Higher Outlay: Phase II allocates ₹1.27 lakh crore, expanding support through capital subsidies, manufacturing-linked incentives, and electronics ecosystem development.
- Strategic Objective: Seeks to establish India as a global semiconductor manufacturing hub, reducing import dependence and strengthening technological sovereignty.
- Domestic Ecosystem: Promotes indigenous components, research, intellectual property, and skilled human capital to build a resilient semiconductor ecosystem.
- Challenges: Returns from Phase I remain uncertain, advanced technologies like EUV lithography are dominated by a few countries, and global competition is intense.
- Opportunity: India's strong semiconductor talent pool can drive innovation, reduce brain drain, integrate India into global value chains, and support AI and emerging technologies.
Larger Investment & Incentive Framework
- ₹1.27 lakh crore allocated under Phase II, significantly higher than Phase I.
- Focus on capital subsidies, manufacturing-linked incentives (MLIs), and support across the electronics manufacturing ecosystem.
- Additional incentives for products using domestic components, technology, and capabilities.
Building India's Semiconductor Ecosystem
- Aims to position India as a strategic hub in the global semiconductor and electronics value chain.
- Focus on developing manufacturing capacity, skilled workforce, research, and intellectual property (IP).
- Recognises semiconductor development as a long-term, multi-decade national mission.
Strategic Importance & Current Challenges
- Strengthens economic security and reduces dependence on foreign supply chains amid geopolitical uncertainties.
- Most Phase I projects are yet to begin commercial production, making returns uncertain.
- Sector may not generate massive employment but offers significant strategic and technological advantages.
Frontier Technologies & Global Competition
- Advanced technologies like Extreme Ultraviolet (EUV) lithography remain concentrated in a few countries.
- India faces intense competition from advanced economies with greater financial resources and technological leadership.
- Semiconductor capability is also crucial for future sectors such as Artificial Intelligence (AI) and high-performance computing.
Talent Development & Future Outlook
- India possesses a strong pool of globally sought-after semiconductor engineers and chip designers.
- Need to create high-quality research, innovation, and employment opportunities to prevent brain drain.
- Successful integration into global semiconductor value chains can enhance strategic resilience, reduce supply-chain risks, and drive long-term economic growth, similar to the Asian Tigers.
Conclusion
The second phase of the India Semiconductor Mission reflects India's long-term commitment to technological self-reliance and strategic resilience. While challenges such as technology gaps, global competition, and uncertain returns persist, sustained investments in manufacturing, research, and skilled talent can integrate India into global semiconductor value chains, strengthen economic security, and position the country as a future electronics powerhouse.