The momentum gathered by the electronics sector is indeed amazing, presenting infinite opportunities. The sector is galloping away and is well on its way to achieving the erstwhile elusive target of producing USD 300 Bn worth of electronic goods within the next three years. Buoyed by the pace, we are now emboldened to target an industry exceeding USD 500 Bn by the year 2030.
In this situation, the two critical constraints for success are time and perseverance. First and foremost is time, which is the only limited and fixed resource, and the second is our ability to persevere. Perseverance has to be understood in its wider meaning, including our determination to pursue our goals and also to remain steadfast and committed to our belief that we can succeed in achieving our ambitious target and vision. We need to progress with determination and a long-term perspective. Success will depend on aggressive investments in innovation, R&D, and manufacturing facilities to enhance competitiveness and gain an edge in export markets. This challenge, which we have accepted, if overcome successfully, would result in immense benefits for India, establishing us as a leader in the global economy.
The India Semiconductor Mission is a huge initiative and the obvious case in point. The Mission has attracted projects worth well over INR 150,000 crores (USD 18Bn), which need to be implemented in the next 4-5 years. It is noteworthy that historically, cumulative investments in the sector have not even been a fraction of this huge amount. This is a eureka moment for the industry, and the announcement of these projects is an extraordinary milestone. If implemented with diligence and dedication, it will change the landscape of electronics manufacturing in the country, enabling us to compete in the global digital economy. All those who have been involved in this mega initiative, including the government – MeitY, India Semiconductor Mission (ISM), Industry Leaders advising ISM, and all stakeholders, deserve our heartiest congratulations and a big shout-out for their efforts.
We are all aware of our abysmal import dependence on electronic components, products, and technology, especially on China, which has caused many a pain to us. In times of supply constraints, our industry and market have suffered grievously. It is heartening that recent trends have been encouraging, with a spate of investments in manufacturing resulting in the growth of domestic output. However, we are far from crossing the hump yet. As per government data and industry reports, India imports over USD 70 Bn of electronics equipment and USD 15 Bn of semiconductors. About 70% of our requirements are still sourced from China.
The entry of Tata Group into the semiconductor domain is a huge impetus for the electronics sector. It lends confidence to all industry stakeholders to enter this domain and support its growth. This confidence is further fortified as Tata has made a wholehearted entry by announcing two major projects, which include the First Silicon Fab valued at INR 91,000 crores and their OSAT project in Assam requiring an investment of above INR 27,000 crores. In addition to this, the first mega OSAT project worth INR 22,000 crores was announced by Micron, which is already under implementation in Gujarat. The third large OSAT investment was announced by CG Power, once again located in Gujarat, investing INR 7,600 crores. Several other projects are in the pipeline, being set up by eminent domestic companies such as Sahasra Semiconductors, which has already established the first memory packaging unit, and Kaynes Semicon, among others. Global leaders strengthening the value chain in India include Applied Materials investing USD 400 Mn and AMD, establishing major development and engineering centers for semiconductor equipment and processors, respectively.
This is the time for India to realize its potential and become a significant player in the global semiconductor value chains. The ISM’s package of INR 76,000 crores has generated significant interest in the country, and the government must deliver on these investment policies. We must further improve the ease of doing business in India, thus ensuring predictability for investors to pursue their projects with confidence for success.
We are all aware of the success story of mobile manufacturing in the country, with mobile exports crossing USD 10 Bn and 100 Mn in numbers. The industry has shown great initiative in developing a product manufacturing ecosystem in the country, and the government has provided due support to enable this growth. The PLI Schemes for mobiles, followed by consumer products, telecom products, as well as IT products, have all contributed to this surge in growth.
The crucial factor in sustaining this growth is enhancing value addition and persevering with our efforts over the long term. Time and perseverance are of critical importance. The weakest link in our ecosystem has been components, where our import dependence has been extreme. Unless we are able to overcome this, we will remain an assembly industry dependent on the global components supply chain, and we will have limited influence on global value chains. As per Counterpoint Research, “India needs a set of anchor companies for key components, which can further attract other smaller component vendors to set up their presence in India.”
This is an important factor because, taking the example of Apple, a key player in India today, is shifting its phone manufacturing to India. However, the bulk of its suppliers are still based in China. It is also heartening that the government is looking to further scale up its semiconductor package of INR 76,000 crores for semiconductors, which was announced in December 2021, as the ISM Phase 1 budget has been almost exhausted. Further, Associations such as ELCINA are advising the government on a focused policy for promoting electronic component manufacturing, including the upstream value chain. This would include consumables and raw materials, which will lend tremendous strength to our industry. It is extremely important that we continue to persevere and not be deterred by delays and failures.
Rajoo Goel
Secretary-General
Electronic Industries Association of India (ELCINA)
