India chipping in, but has a long way to make its global presence

India has taken the first step in its semiconductor journey. On Tuesday, India unveiled the first ‘Made in India’ chip, making a landmark movement for the country. The Vikram 32-bit processor along with test chips of four approved projects were presented in an event. “First ‘Made in India’ Chips! A moment of pride for any nation chip.

Today, Bharat has achieved it.”- Union IT Minister, Ashwini Vaishnaw wrote in social media platform ‘X’. In many ways, India’s aggressive investment plans in the semiconductor space have started to see visible outcomes. Currently, about 10 semiconductor projects worth over $18 billion are underway. Interestingly, India’s semiconductor mission started post-Covid pandemic when the country faced severe shortage of chips owing to supply disruption in China.

This affected manufacturing process of several electronics’ hardware like computer, laptops, automobiles, consumer electronics and many more adversely. Such shortfall led the Indian government o launch the India Semiconductor Mission.

The country unveiled Rs76,000-crore incentive schemefor semiconductors. Under this scheme, India planned to set up more than 20 semiconductor design, components manufacturing and display fabrication (fab) units over the next six years. The current fab units are part of this plan, which has been made four years back. These are important developments from current geopolitical perspective. The US under Doland Trump has turned protectionist and imposed tariffs on all its trading partners.

The country has also put restriction over access of China to advanced chips. Given the worsening relationship between India & the US, India may have to face similar fate if situation doesn’t change for better. It means self-reliance is the buzzword in the semiconductor space. As India grows and strives to be a major power in the global arena, India should be self-reliant in its critical space. Currently, India is a major consumer of electronics goods.

However, more than 70 per cent of such goods are imported from three countries- China, South Korea and the US. India has limited number of brands of its own. As the country aspires to manufacture its own brands, own chips will definitely help in meeting such objectives.

Importantly, India has always been a hub of chip design. Most global semiconductor companies have technology centres in India for decades now in which advanced designs are getting done. Around 20 per cent of chip designers are from India, showcasing the talent base in the country.

Against this backdrop, India’s move to manufacture semiconductor manufacturing units is a step in the right direction. While India aspires to be a semiconductor hub in the world, this path requires assured supply of critical raw material. The world requires ample supply of rare earth material for manufacturing advanced chips.

And China processes more than 70 per cent of all rare earth material supply now. In this perspective, it is important that India ensures assured supply of critical material from China and other nations to realise its semiconductor mission’s objectives.

With the unveiling of first ‘Made in India’ chip, India has taken the first step towards self-reliance but it has to coordinate between many moving parts to emerge as a semiconductor hub.