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The Future of Semiconductors in India
The semiconductor industry in India is an integral part of the country's technology sector and has made significant strides in recent years. Will the country be able to hold onto its hard-won position in the sector when faced with newly emerging and ever-evolving competitors?
09 February, 2023

The semiconductor industry in India is an integral part of the country’s technology sector and has made significant strides in recent years. It is now seen as a major contender on the global stage, with several Indian companies emerging as key players in the industry. Will the country be able to hold onto its hard-won position in the sector when faced with newly emerging and ever-evolving competitors?

In 2021, the India Electronics and Semiconductor Association (IESA) valued the semiconductor market in India to be worth $27 billion, with some of its key players including the technology sector’s largest and most influential companies. Among these are Tata Consultancy Services (TCS), Wipro, and Infosys, which are some of the top global producers of semiconductors and have a significant presence in both the consumer and industrial markets.

However, the semiconductor industry in India faces significant competition from other countries, including China, Taiwan, the United States, and South Korea. These countries have long histories of innovation and leadership in technology and have a strong presence in the global market. Thus, in order to maintain its hold, the semiconductor industry in India must focus on developing new technologies and production processes that are competitive on the international stage.

To achieve this, the Indian government has made significant investments in semiconductor research, infrastructure, and development to support the growth of the industry, as well as providing tax incentives for companies operating in the sector. In December 2021, the Union Cabinet of India announced its $10 billion Production-Linked Incentive (PLI) scheme, which provided funding for both the design and manufacture of semiconductor chips in the country. Extra financial support for companies was added to the program last September to further boost the sector. In addition, many companies are also investing in their own research and development efforts to stay ahead of the curve and develop new technologies that can give them a competitive edge.

One of the main drivers of the semiconductor industry in India is the continuous development of new and more advanced materials and technologies, allowing for the production of faster, more powerful, and more energy-efficient devices. Another contributing factor is the presence of a highly skilled and talented workforce. The industry requires a wide range of highly specialized professionals including engineers, researchers, and technicians, and India has a strong tradition of producing top quality professionals in these fields. This has helped to attract a number of international companies to invest in the semiconductor industry in India. Just last year, FoxConn, a Taiwanese electronics manufacturer, together with Indian mining company Vedanta, announced bold new plans to establish a new semiconductor plant in Gujarat, potentially bringing 100,000 jobs to the region.

A major challenge currently facing the semiconductor industry in India is the cost of production, which is often higher than in other countries due to a variety of factors, including higher labour costs and a lack of advanced production equipment. In order to remain competitive, the industry must find ways to reduce these costs and improve efficiency. This includes investing in advanced production technologies and techniques, as well as improving supply chain management and logistics.

Overall, the semiconductor industry in India is likely to remain a vital and competitive player in the global economy. With strong government support, a talented workforce, and a long history of innovation, the industry is well-positioned to continue developing new technologies and driving progress in the electronic devices and systems that are an integral part of our daily lives. Despite the challenges posed by competition from other countries, the industry is well-equipped to rise to the occasion and maintain its position as a leader in the global market.

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