Vedanta-Foxconn Semiconductor Plant Leads India to Usher in Golden Age for Electronics

New Delhi: It is a known fact that an overwhelming majority of the worlds chip and semiconductor output is limited to some countries like Taiwan, China, South Korea, Singapore, Hong Kong, Thailand and Vietnam. Apart from the obvious reasons of monopoly and overdependence on few nations, it also hampers the interests of the global population at large.

Many countries far-off have to pay a heavy price while some are able to deal in excesses of these chips, acting as middlemen in some cases. However, of late, a number of countries have been actively trying to lure companies into manufacturing the same on their soil to usher in a new era of electronics manufacturing and obtain seamless access to chips overall.

It was estimated that India had $15 billion in 2020 that would reach to $63 billion by 2026, as per growing demand and application in consumer and automotive communications, wireless communication etc.

Over the past few years, India has made rapid strides in the manufacturing sector as well as the semiconductor industry sector as part of its resolve to not remain dependent on the thin supply chain of semiconductors emanating from China, Taiwan and few more countries. Given the strategic interests at play with this product, it becomes increasingly important to reduce the nation’s dependence for semiconductors and chips on a foreign power.

The recent acceleration of tensions between China and Taiwan as well as the crisis during the Covid-19 pandemic have provided the world with enough testimony about how easily the situation can change into a supply chain disaster of gigantic proportions, with the ability to choke the suppliers and the big consumers like India completely.

In this context, it comes as a welcoming news that the Indian natural resources conglomerate Vedanta in collaboration with Taiwanese manufacturing giant Foxconn is all set to manufacture semiconductors on Indian soil with the announcement of a $19.5 billion pact for such plants in Gujarat.

The 60:40 joint venture of Vedanta-Foxconn will set up a semiconductor fab unit, a display fab unit and a semiconductor assembling and testing unit on a 1000-acre land in the Ahmedabad district. With this plant functioning, India would enter the elite club of five nations that have the ability to manufacture glass and semiconductors. It is indeed a revolutionary step with the power to transform Indian electronics as an industry as well as make it much more affordable to Indian consumers.

Semiconductor chips are vital pieces of many digital consumer products from ATM cards, computer to car also. Now, every Indian can own a smart television, mobile, laptop and other electronic goods. In addition, this single step can also create a huge ecosystem for India’s ancillary industries. Interestingly, estimates and surveys predict the revenue generation to the tune of about $100 billion and quadruple growth for the Ministry of Micro, Small & Medium Enterprises (MSME) sector as a whole. This massive project has the potential to improve the livelihoods of at least 1 lakh individuals as well as put India on the global silicon map. Though extremely bold and ambitious in its targets, the venture aims to start manufacturing display and chip products within two years from now.

It is clear that to mount such a large-scale operation, the private sector ought to be working closely with the state governments to be able to use the high-tech clusters with requisite infrastructure, land, semiconductor grain water, power, etc. in an effective manner. While it is clear that only active government support can aid with the setting up of a semiconductor factory, the recent commitment by the Government of India to expand incentives beyond $10 billion for those investing in semiconductor manufacturing surely proves that India is serious about becoming a key player in the global supply chain for chips and semiconductors.

With a renewed focus on research & development in this sector, this inward-looking approach of the Government of India has ensured that our domestic semiconductor industry has been given enough of a shoulder to rely on, to be able to lead us out of a supply chain breakdown/logjam when needed. Playing a significant role in innovation, this effort to develop India into a significant manufacturing hub with an entrepreneur- friendly ecosystem would help India stand a real chance at emerging as a global hub for semiconductor manufacturing as well as a provider of affordable electronics items to its local consumers in line with the principles of Self-Reliant India.

It is a result of these bold policy decisions in the electronics industry that the nation has arrived at the cusp of breaking free from the monopolised chip manufacturing global industry. Building better, India is sure to gradually emerge as a giant manufacturer of the chips and semiconductors, thereby also developing into a hub of cutting-edge innovation and research.