In recent years, India's semiconductor industry has made significant steps towards self-reliance, with the government encouraging its development.
India is a global hotspot for chip design talent. The nation is now moving towards full-scale manufacturing, with the India Semiconductor Mission and multi-billion-dollar investments.
The domestic demand for semiconductors is expected to grow rapidly across various industries. Such as electronics, automotive, telecom, and artificial intelligence, driving the country's semiconductor market to exceed USD 100 billion by 2030.
However, India has been primarily dependent on imports, accounting for close to 90-95 per cent of the semiconductor requirements. This dependency has created some difficulties in supply chains and the importance of a strong domestic supply chain.
A significant challenge in India's semiconductor journey is its continued dependence on imports. Especially for essential manufacturing components. It is reported that more than 90 per cent of the equipment used to manufacture chips is imported. And almost 85-90 per cent of the specialty chemicals and gases used in semiconductor manufacturing are imported.
This dependency poses serious execution problems. The industry uses highly specialized equipment, including photolithography systems, and ultra-pure materials, which are controlled by a handful of global players.
India's upstream ecosystem is not very developed to manufacture these components locally, which makes it challenging to be fully self-reliant. Though India has advanced the investment process and allowed for fabrication plants, there are still a number of issues that need to be addressed.
Such as delays in execution, infrastructure shortages, and technological challenges. Experts from the industry have noted that India is strong on chip design, but is weak on the core manufacturing skills and equipment production.
Another key challenge is the increasing demand-supply mismatch. Currently, India produces just a small percentage of semiconductors local. And this trend is likely to increase as demand for semiconductors rises across industries.
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The government is actively working to fill the gaps in the supply chain with policy. With incentives and initiatives like Semiconductor Mission 2.0, which will accelerate the domestic production of components, materials and equipment.
India is also putting efforts to build ATMP units that do not require as much investment as a complete fabrication plant. This will help to improve the ecosystem over time and help to decrease the dependency on imports.
According to reports, through current developments, India is expected to produce up to 60 per cent of its semiconductor needs by 2035. In addition, several semiconductor manufacturing facilities and partnerships with international technology giants are likely to speed up the ability development process.
In the long run, it will be important that the country builds its manufacturing skills, fortifies supply chains, and invests in new and advanced technologies. However, India's future in the semiconductor industry is bright and will continue to be a success despite these difficulties.
To fill gaps in the supply chain, the government is actively taking steps in the areas of policy incentives and initiatives. The road to the future is challenging, but the country's strategic direction, rising demand, and policy support make it a potential force in the global semiconductor industry.
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