India's Prime Minister Narendra Modi has said that the country has no option but to be self-reliant on semiconductors. This comes at a time of the global semiconductor crisis and the geo-political tensions between China and the US alongside the latest issue related to the Russian invasion of Ukraine.
"India has no option but to be 'atmanirbhar' when it comes to semiconductors. This sector has brought new possibilities for Make in India," Modi said on March 3 at a post-budget webinar on 'Make in India for the World' organized by the Department for Promotion of Industry and Internal Trade.
The semiconductor shortage has particularly impacted the automobile sector across the world alongside consumer electronics. Most semiconductors are made in Taiwan, South Korea and the US split across fabs of the biggest chipmakers - TSMC, Samsung, and Intel.
The Modi government has announced a Rs 76,000 crore production linked incentive scheme for domestic semiconductor and display board production.
Volkswagen Taigun India
"A county as large as India will never be able to progress and give opportunities to our youth if it only remains a market. We have seen during the pandemic how global supply chains have been destroyed... The world today sees India as a manufacturing powerhouse. Our manufacturing sector is 15 percent of India's GDP. But there are infinite possibilities in front of Make in India. We must work together to make a robust manufacturing base," the prime minister said.
There has been chatter of Foxconn partnering with local players for manufacturing chipsets in India. In the late 2000s, Intel was interested in creating a Fab in India, but that plan never came to fruition. Since then, thanks to the lack of clean water and constant electricity, India has never been considered a conducive market for manufacturing semiconductors.
Many automakers have had to delay the launch of vehicles or haven't managed to fulfill production schedules because of the lack of chipsets. In fact, in the case of Volkswagen, it had to remove the electric ORVMs from its cars because it couldn't procure microcontroller chips for the same.
