In recent years India has been increasing its share in the electronics industry, planning to become a hub in the future.
Currently India has a lot of dependence on imported chips, heavily relying on the Chinese supply chain. One of its goals is to be, in part, autonomous in its chip production. The supply chain issues brought about by covid and other global factors really highlighted this.
But it is not easy to just move production of something so complicated to another country. It would require massive amounts of funding to reshore production.
Make in India
In 2021 the Indian government announced funding equal to $10 billion to improve domestic production over the next 5 years. Several companies have put in bids for the funding, including Vedanta, IGSS Ventures, and India Semiconductor Manufacturing Corp.
The funding is part of the Government of India’s ‘Make in India’ plan, encouraging investment and innovation in the country. Prime Minister of India Narendra Modi announced the initiative in 2014, focusing on 25 sectors including semiconductors and automobiles.
One of India’s goals is to move away from reliance on imports, on which they currently spend $25 billion annually. Only 9% of India’s semiconductor needs are met domestically. If production is reshored in part, this would increase local jobs and income for the country.
As it stands, India currently has more of a focus on R&D but don’t have fabs for assembly and testing. The nearby Singapore and manufacturing powerhouse Taiwan provide most of its current stock.
A change in the air, and in shares?
The recent approval of the Chips Act in the US means there may be a shift in industry shares. At the moment America has a 12% share, but if production is re-shored this may impact the Asian market.
However, India and the US, alongside the UAE and Israel plan to form an alliance. With financial aid from the bigger players, the alliance plans to focus on infrastructure and technology.
India was the US’s 9th largest goods trading partner in 2021, with $92 billion in goods trade in 2019. India is also the EU’s 10th largest trading partner, but with domestic semiconductor industry growth this might change.
India’s end equipment market revenue was $119 billion at the end of 2021. Its annual growth rate is predicted to be 19% in the next 5 years.
India is aware of the importance of the semiconductor industry, and set up an India Semiconductor Mission (ISM) in 2021. Its goal is to create a reliable semiconductor supply chain, and to become a competitor against giants like the US.
Relish the competition
India’s potential in the semiconductor industry is increasing, and there is likely to be more investment in the future. It is difficult to tell how much further down the line it would be before India becomes a competitor, but the coming years are sure to be interesting.
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