As usual, a section of the media appears bent upon undermining the recent Indo-US trade agreement, over the development of the semiconductor industry in the country. India and US have inked an MoU in this regard among other major agreements. As a result, the US-based Micron Technology has agreed to establish a Semiconductor Unit worth Rs 22,500 crore near Ahmedabad and has signed the first MoU with the Gujarat statement government.
But, doubting Thomas is trying to propagate that the proposed agreement reached between India and US is not to meant to promote the manufacturing of semiconductors, is nothing short of their prematurity. It can be construed as a mischievous campaign claiming that the proposed so-called manufacturing units of semi-conductors were restricted only to fabrication and not to promote either technology transfer or development. It is true that on the face of it, the MoU may give the impression that it seeks to establish a collaborative mechanism on semiconductor supply chain resiliency and diversification given US’s CHIPS AND Science Act 2022 and semiconductor mission. Yet, the agreement also embedded with the conditionality of ‘transfer of technology’ as well as ‘manufacturing’ which has become the new norm for all future trade agreements by India ever since Narendra Modi’s government took over the reins. A new shift that was unheard of as the BJP-headed NDA government wedded to promote the ‘Make in India’ concept, though the opposition through Social Media is alleging that transfer of technology is not part of the agreement. Secondly, it is also alleged that while India spends 70%, 100% ownership is given away to Micron. Both appears far-fetched and with ulterior motives without substantiating.
That being the fact, the effort of a section of media to mislead people over the new MoU only confines to ‘supply chain’ or ‘fabrication’ is nothing short of blatant lies being spread with ulterior motives to malign the present government at the Centre. This was evident from the following facts; (a)The project aims to create 5,000 direct jobs and contribute to India’s Self-Reliance in memory chip manufacturing, and (b) It aligns with the government’s goal of promoting domestic manufacturing and reducing import dependency in the semiconductor sector and is expected to bolster India’s position as a global semiconductor manufacturer. One may ponder. what are semiconductor chips, all about. Semiconductors are materials that have a conductivity between conductors and insulators.
They can be pure elements – silicon and germanium or compounds – gallium, arsenide, and cadmium selenide. They are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products. These chips are now an integral part of contemporary automobiles, household gadgets, and essential medical devices such as ECG machines, etc. Semiconductors are essential to almost all sectors of the economy including aerospace, automobiles, communications, clean energy, information technology and medical devices etc. The high demand for these critical components has outstripped supply, creating a global chip shortage and resulting in lost growth and jobs in the economy.
Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 5.0. As far as India is concerned, the initiative to promote the semiconductor industry has begun only last year and it was estimated to be a mere 27 billion US dollars, with 90 percent of its components being imported from countries like China, Taiwan, and Japan. And, the Indian semiconductor market was expected to reach 55 billion US dollars by 2026 with its consumption and set to breach even the 80 billion US dollar mark within this period. However, it is estimated to touch 110 billion by 2030.
Yet, the major challenge of this industry happens to be the ‘cost factor’ in setting up the fabrication (or fab) facility and there is no denying the fact that India is lagging behind by a generation or two behind the latest technology. Yet, it is no difficult task, if there is a political commitment and resolve. One of many reasons India was lagging may be because semiconductors and display manufacturing is a very complex technology-intensive sector involving huge investments. Added to that high-risk factor and long gestation, besides the payback periods and fast-changing technology, all attributes to many of those Indian entrepreneurs are not showing much interest. Notwithstanding the fact, India has a decent chip design talent but never built up chip fab capacity.
Although the ISRO and DRDO have their respective fab foundries, they are primarily to meet their requirements and are also not as sophisticated as the latest in the world. India has only one fab which is located in Punjab’s Mohali. Against that backdrop, none can dare deny that it was Modi-government’s initiative, though minuscule, announced a roughly 10 billion dollar production-linked incentive (PLI) scheme to encourage semiconductor and display manufacturing in the country, two years ago (2021). It was MeitY, which has launched the first-ever design-linked incentive (DLI) scheme to nurture at least 20 domestic companies involved in semiconductor design and facilitate them to achieve a turnover of more than Rs. 1500 crore in the next five years.
And the semiconductor mission had also the Centre’s outlay of Rs 76,000 crore as part of the comprehensive program for the development and its sustainable display eco-system. It was meant to set up Semiconductor Fabs with fiscal support up to 50 percent of the total project cost, subject to a ceiling of Rs 12,000 crore per unit. The scheme also included setting up of compound semiconductors, Silicon photonics, Sensors Fab, and Semiconductor A TMP/OSAT facilities. Against that backdrop, US and India are trying to explore opportunities to collaborate with other countries such as Taiwan and Japan or other technologically advanced, friendly nations to promote domestic manufacturing and reduce import dependency. That being the case, the Lutyen’s media’s efforts to give a new ‘spin’ to the facts are not only unwarranted but establishes, how anti-Indian forces are at work to defame the efforts of the present dispensation at the Centre.
