India has announced a $10 billion incentive plan to woo global chipmakers. But, will semiconductor manufacturers walk down the red carpet rolled out by the government and set up factories here?
India is now the world’s biggest smartphone manufacturer after China. And in its next step to make the country a global hub for electronics production, the government has approved a $10 billion incentive package to semiconductor and display manufacturers.
The government announced it will provide support of up to 50% of the project cost to eligible companies. The Centre also said it will work closely with state governments to provide the right infrastructure for fabrication plants.
India imports 100% of its semiconductors, spending about $24 billion annually. Now the plan is to make India self-sufficient in the production of semiconductor chips that go into phones, computers, cars, and everyday electronics such as washing machines, TVs, and refrigerators.
It all comes at a time when tech companies and automakers around the world are grappling with chip shortages. Despite strong demand, Indian carmakers are estimated to lose sales of 5 lakh units in FY22 due to chip shortage, according to ICRA
Ironically, India is a leading chip designer with 25,000 engineers working in this field. Our semiconductor design market was worth more than $33 billion in 2020.
The new incentive package includes support to homegrown chip product design companies. The semiconductor industry is an extremely concentrated one both in terms of companies and countries.
Just top 3 companies, Intel, Samsung, and TSMC made $188 billion in revenue in 2020, as much as the next 12 largest chipmakers combined.
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