Introduction
India’s Silicon Saga journey towards becoming a semiconductor hub is gaining momentum, as Prime Minister Narendra Modi forges an agreement on semiconductor supply chains during his visit to the United States. The Memorandum of Understanding (MoU) signed earlier this year marked a crucial step in India’s pursuit of semiconductor self-reliance, evoking a reminiscent look at the nation’s past semiconductor policy efforts and the valuable lessons they hold for the future.
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Scientific Temper and Early Industrial Progress
Following India’s independence in 1947, the country embarked on a mission to recover from nearly two centuries of deindustrialization under British colonial rule. The early post-independence technology policies, much like the current Aatmanirbhar Bharat initiative, reflected former Prime Minister Jawaharlal Nehru’s emphasis on fostering a “scientific temper.” India sought to understand and adapt technologies rather than passively importing them. Nehru’s interactions with American industrialists mirrored India’s modern industrial policies, emphasizing the importance of comprehending technology rather than relying solely on external expertise.
The 1960s: Indian Companies Venture into Semiconductor Production
In the 1960s, a handful of Indian companies ventured into producing germanium semiconductors, paving the way for future advancements. During this period, the government relaxed licensing requirements and reduced import duties on electronic equipment, encouraging foreign investments in electronics, telecommunications, and energy sectors. Bharat Electronics Ltd. (BEL) and Hindustan Aeronautics Ltd. (HAL), both under the Ministry of Defense, emerged as major players in India’s semiconductor space, catering primarily to the defense sector.
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1980s Renaissance: Government Initiatives Propel Semiconductor Industry
The 1980s witnessed a resurgence in India’s semiconductor industry, fueled by a series of policies introduced by the Rajiv Gandhi government. However,Licensing agreements with global players like Hitachi, AMI, and Rockwell facilitated the establishment of Semiconductor Complex Ltd. (SCL), a public sector undertaking. Simultaneously, the Indian government invited bids for the National Silicon Facility, garnering significant interest from companies in the United States and East Germany. Metkem Silicon Ltd., supported by BEL, established its polysilicon facilities in Tamil Nadu.
India’s Unique Niche in Semiconductor Exports
India carved out a unique niche in the semiconductor industry, exporting older-generation chips phased out by other countries’ manufacturers. This allowed India to catch up with the latest semiconductor manufacturing technologies by the end of the 1980s, positioning the nation as a significant player in the global market.
1990s to Present: Challenges and a Fading Edge
Unfortunately, India’s semiconductor lead faltered in the 1990s. A major fire in 1989 devastated the SCL complex in Chandigarh, resulting in limited chip production for ISRO. Economic liberalization policies from 1991 led to an influx of cheap semiconductor imports, undermining local manufacturing. Moreover, promised government subsidies, especially in electricity, failed to materialize, posing additional challenges for the semiconductor ecosystem in India.
The 2007 Semiconductor Policy and Unfulfilled Potential
In 2007, the government unveiled the Semiconductor Policy, aiming to attract substantial investments and establish fabrication units. Although both AMD and Intel showed interest in setting up fabrication units, several factors led to their eventual failure to materialize. However,The passage delay of the Semiconductor Policy, stringent minimum investment requirements, and AMD’s decision to form GlobalFoundries as a separate company played significant roles in this setback.
A Bright Future Beckons: India’s Journey towards Semiconductor Self-Reliance
As India takes strides towards becoming a semiconductor powerhouse, the lessons from its past efforts will guide its path to success. Moreover,the recent MoU on semiconductor supply chains and the government’s commitment to providing incentives and streamlined approvals set the stage for India’s resurgence in the global semiconductor value chain. With an unwavering focus on Aatmanirbharta and fostering innovation, India’s electronics ecosystem is destined for a bright and self-reliant future in the semiconductor domain.
