India is planning to flourish the manufacturing of semiconductors in the country.
The sector needs huge capital support and a production-linked incentive plan.
Sources said senior officers were in talks with some of the top semiconductor manufacturers such as Taiwan Semiconductor Manufacturing Company, Intel, AMD, Fujitsu, United Microelectronics Corporation, etc.
Due to alteration in imports and exports in the global market because of the COVID-19 pandemic, there was a chip shortage. This had a huge effect on the population in different sectors.
The chips do a lot of things including helping us to drive our car, use our computer software, etc. Only a handful of companies in the world has the knowledge and infrastructure to make them.
The world is running out of chips. The companies can’t manufacture them fast. The demand is exceeding the supply.
When people were stuck in homes during the pandemic, the demand for electronic goods increased. A storm of natural disasters, a fire at one of the world’s leading firms and the ongoing US-China trade war disrupted the production and distribution of semiconductors.
The auto sector was not prepared to meet the surge and faced the blow. Many cars were waiting in lots for chips.
Cars today are far more complex than ever before. They need anywhere from several hundred semiconductors to more than a thousand.
These chips control everything from the ignition to the braking system and make sure your seat is in perfect position as you drive.
This crisis is expected to extend till 2022 and 2023.
This initiative is handled and watched by the Prime Minister’s Office (PMO) and various ministries have incorporated it into this process.
Help to meet financial requirements, reduction of taxes on certain components and gains through different schemes is needed. Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and production linked incentives (PLI) are some available programmes.
The manufacturing of semiconductors demands modern technology and good availability of water and electricity. These are the main reasons why companies are reluctant to invest in it most of the time.
The production of electronics is only $75 billion now in India. By 2025, it would become $350-400 billion. Thus the demand for semiconductors is going to increase in India. This prediction might attract investors.