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Why India’s focus on semiconductor manufacturing is strategically important

Why India’s focus on semiconductor manufacturing is strategically important

The government’s focus on boosting semiconductor production in India could go a long way in establishing the country as a global hub for electronics goods, besides creating jobs and attracting investments from top firms around the world.

On Wednesday, the government approved a Rs 76,000 crore production-linked incentive (PLI) scheme to boost semiconductor and display manufacturing -- a move that experts say will benefit India strategically, especially at a time when the entire world is facing a shortage of semiconductors.

While India has tried or at least expressed interest in boosting semiconductor production in the country in the past, this is the first time a scheme has been approved to boost manufacturing of semiconductors that are an integral part of modern tech products, including cars, electronic gadgets and even medical devices.


Besides helping the country reduce import dependency, the scheme to boost semiconductor production will bring in massive investments and create a large number of jobs.

As per estimates, the scheme will lead to the creation of 35,000 specialised jobs apart from one lakh indirect employment opportunities. It could also generate investments to the tune of Rs 1.7 lakh crore.

Union minister Ashwini Vaishnaw said the scheme would boost the development of a complete semiconductor ecosystem, ranging from design, fabrication, packaging, and testing.

The scheme to boost domestic semiconductor manufacturing has massive strategic advantages, considering factors such as low labour cost and vast production capacity. It would not only help domestic companies reduce dependence on semiconductor imports, but also generate revenue from exports to other countries.

Though the scheme’s benefits will take at least 3-5 years to materialise, it will ensure that there is no sudden shortage of chips that trigger massive price hikes across various segments of electronics, cars and hi-tech goods.

As the situation stands, stakeholders have welcomed the scheme and sought more clarity on how it will help the sector. Stakeholders also want to know whether states will be allowed to extend additional incentives to boost semiconductor manufacturing.

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