SYLLABUS
GS-3: Science and Technology- Developments and their Applications and Effects in Everyday Life.
Context: According to the EY–India Electronics and Semiconductor Association (IESA) report, ‘Semicon India 2.0: From Capacity Creation to Ecosystem Leadership’, India’s semiconductor market is projected to grow from nearly USD 64 billion in 2026 to USD 200 billion by 2035.
Key Findings of the Report
• Rapid Market Expansion: India’s semiconductor market is projected to more than triple between 2026 and 2035, driven by rising electronics consumption and emerging technologies.
• Sector-wise Demand: Consumer electronics accounts for approximately 30% of India’s semiconductor market, followed by the automotive sector at 16% and industrial applications at 15%.
• Emerging Growth Areas: Artificial intelligence, data centres, telecommunications, electric mobility and advanced manufacturing are expected to generate additional semiconductor demand.
• Rising Import Dependence: Semiconductor imports increased from USD 5.7 billion in FY 2016–17 to USD 30.3 billion in FY 2024–25, registering a compound annual growth rate of approximately 23%.
• Skilled Workforce: India has nearly 20% of the world’s chip design engineers, providing a significant talent base for semiconductor design, manufacturing and commercialisation.
• High-Potential Segments: Advanced packaging, compound semiconductors, photonics and chip-to-system integration have been identified as promising areas for future growth.
• Policy Priorities: The report recommends integrated manufacturing clusters, alignment of state-level policies with Semicon India 2.0 and specialised training programmes covering fabrication, design and packaging.
Status of India’s Semiconductor Market
• India is gradually transitioning from a semiconductor design-focused ecosystem towards domestic manufacturing and greater integration across the semiconductor value chain.
• Total electronics production increased nearly sixfold, from ₹1.9 lakh crore in FY 2014–15 to ₹11.3 lakh crore in FY 2024–25.
• Electronics manufacturing grew approximately sevenfold during the same period.
• Electronics exports increased nearly elevenfold over the decade.
• Semiconductor imports increased more than fivefold between FY 2016–17 and FY 2024–25, highlighting the need to strengthen domestic manufacturing capabilities.
• Expanding fabrication, assembly, testing and packaging facilities is essential to reduce supply-chain vulnerabilities and increase domestic value addition.
• India’s engineering talent, chip-design capabilities and growing electronics market provide a foundation for developing an integrated semiconductor ecosystem.
Key Government Initiatives
• India Semiconductor Mission (ISM), 2021: Approved in December 2021 with an overall financial outlay of ₹76,000 crore, it aims to establish a sustainable semiconductor and display manufacturing ecosystem through support for fabrication, display manufacturing, chip design, research and skill development.
• Semiconductor Fabs Scheme: Provides financial support for establishing semiconductor wafer fabrication facilities in India to develop domestic chip manufacturing capabilities and strengthen India’s integration into global electronics value chains.
• Compound Semiconductors and ATMP/OSAT Scheme: Supports compound semiconductors, silicon photonics, microelectromechanical systems, sensors, and Assembly, Testing, Marking and Packaging (ATMP) and Outsourced Semiconductor Assembly and Test (OSAT) facilities to strengthen the downstream semiconductor value chain.
• Design Linked Incentive (DLI) Scheme: Promotes domestic semiconductor design capabilities by supporting startups and micro, small and medium enterprises through financial assistance, design infrastructure and access to advanced electronic design automation tools.
• Semicon India Programme: Promotes investment, international collaboration, research commercialisation and skill development across the semiconductor value chain through the India Semiconductor Mission.