केंद्रीय मंत्रिमंडल ने सेमीकॉन 2.0 को दी मंजूरी: भारत बनेगा सेमीकंडक्टर हब

15 Jul केंद्रीय मंत्रिमंडल ने सेमीकॉन 2.0 को दी मंजूरी: भारत बनेगा सेमीकंडक्टर हब

Subject Relevance — Where This Topic Fits

• GS Paper III — Economy (Infrastructure: Energy, Ports, Roads, Airports, Railways etc.; Investment models; Science and Technology- developments and their applications and effects in everyday life; Indigenization of technology and developing new technology; Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology and issues relating to intellectual property rights.)  |  GS Paper II — Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.
• Prelims: Semicon 2.0, Semiconductor Fab, ATMP/OSAT, Compound Semiconductors, Design Linked Incentive (DLI), PLI Scheme, 28nm-110nm node, Clean Room Technology, Intellectual Property (IP), Electronics System Design and Manufacturing (ESDM)
• Essay: India’s Trillion-Dollar Digital Economy: The Role of Indigenous Semiconductor Manufacturing, Technological Sovereignty and National Security: A Critical Examination of India’s Semiconductor Journey

Quick Revision: Semicon 2.0, with its ₹1.27 lakh crore allocation and six-pillar strategy, is India’s ambitious, long-term commitment to becoming a global semiconductor design and manufacturing hub, crucial for economic growth, strategic autonomy, and technological leadership.

Why is this in the news?

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has recently approved ‘Semicon 2.0’ with an allocation of ₹1,27,500 crore. This significant approval underscores the government’s unwavering commitment to establishing India as a global hub for semiconductor design and manufacturing, building upon the foundations laid by Semicon 1.0 and addressing the critical need for long-term policy support in this strategic sector.

Background

• Semiconductors are the foundational building blocks of modern electronics, powering everything from smartphones and computers to critical infrastructure and defence systems.
• The global semiconductor supply chain is highly concentrated, with a few nations dominating manufacturing, leading to vulnerabilities exposed during recent geopolitical events and the COVID-19 pandemic.
• India, despite its strong IT services sector, has historically been a consumer rather than a producer of semiconductors, relying heavily on imports.
• The ‘India Semiconductor Mission’ (ISM) was launched in December 2021 with a comprehensive package of incentives to attract investments in semiconductor and display manufacturing.
• Semicon 1.0 witnessed initial successes, including the approval of 12 manufacturing units with investments exceeding ₹1.64 lakh crore, and some units commencing commercial production.
• The strategic imperative for India is to achieve ‘technological sovereignty’ and reduce dependence on foreign sources for these critical components, thereby bolstering national security and economic resilience.

What is Semicon 2.0?

• Semicon 2.0 is the second phase of India’s ambitious programme aimed at fostering a robust domestic semiconductor ecosystem, building on the momentum generated by Semicon 1.0.
• It is a comprehensive, long-term policy framework designed to provide sustained support and incentives for semiconductor design, manufacturing, and research and development (R&D) within the country.
• The programme is structured around six key pillars: Design, Machines & Materials, Fab Establishment, ATMP/OSAT Strengthening, Research & Development, and Talent Development.
• With a substantial budget allocation of ₹1,27,500 crore, it signifies a significant governmental commitment to transforming India into a global semiconductor manufacturing and design hub.
• The initiative aims to attract more global manufacturers to set up various types of fabs (silicon, compound semiconductor, display, discrete component) in India.
• It also focuses on developing indigenous Intellectual Property (IP) in chip design and establishing India as a leading nation in this domain.
• Semicon 2.0 seeks to strengthen the entire value chain, from raw material suppliers and equipment manufacturers to advanced packaging units and R&D institutions.

Key Features

Why it Matters

Economic Growth and Job Creation

• The semiconductor industry is capital-intensive and high-tech, attracting significant foreign and domestic investment, thereby boosting GDP.
• It will create a multitude of highly skilled jobs in design, engineering, manufacturing, and R&D, fostering a knowledge-based economy.
• The development of a domestic semiconductor ecosystem will have a multiplier effect across various sectors, including automotive, consumer electronics, IT, and defence.

Strategic Autonomy and National Security

• Reduces India’s critical dependence on imported semiconductors, mitigating supply chain vulnerabilities and geopolitical risks.
• Ensures access to essential components for strategic sectors like defence, space, and telecommunications, enhancing national security.
• Positions India as a technologically self-reliant nation, capable of designing and manufacturing its own critical electronic components.

Technological Leadership and Innovation

• Fosters a culture of innovation and R&D, pushing India towards developing cutting-edge technologies and intellectual property in chip design and advanced manufacturing processes.
• Attracts global technology leaders and encourages collaborations, facilitating technology transfer and skill upgradation.
• Establishes India on the global semiconductor map, enhancing its soft power and influence in the high-tech domain.

Supply Chain Resilience

• Diversifies the global semiconductor supply chain, offering an alternative manufacturing base and reducing concentration risks.
• Strengthens India’s position in global value chains, making it a more attractive destination for high-tech manufacturing.
• Contributes to global economic stability by ensuring a more robust and distributed supply of critical electronic components.

Challenges

1. High Capital Investment and Long Gestation Periods

• Setting up a modern semiconductor fab requires billions of dollars in investment, with returns often taking many years.
• The initial capital outlay for infrastructure, machinery, and R&D is immense, posing a significant financial burden.

UPSC Link: GS III — Investment models; Challenges to industrial growth

2. Technology Access and Transfer

• Advanced semiconductor manufacturing technology is proprietary and closely guarded by a few global players.
• Negotiating technology transfer agreements and acquiring cutting-edge process nodes can be complex and expensive.

UPSC Link: GS III — Indigenization of technology; Intellectual Property Rights

3. Talent Pool and Skill Gap

• The semiconductor industry demands a highly specialized workforce, including process engineers, materials scientists, and chip designers.
• Despite efforts, a significant skill gap exists in India, requiring extensive training and development programmes.

UPSC Link: GS II — Human Resource Development; GS III — Skill development

4. Infrastructure Requirements

• Fabs require uninterrupted power supply, vast quantities of ultra-pure water, and a highly controlled cleanroom environment.
• Developing this specialized infrastructure at scale across multiple locations presents logistical and environmental challenges.

UPSC Link: GS III — Infrastructure (Energy, Water); Environmental impact assessment

5. Global Competition and Geopolitics

• India faces intense competition from established semiconductor manufacturing hubs like Taiwan, South Korea, and the US.
• Geopolitical tensions and trade wars can impact supply chains, technology access, and market dynamics.

UPSC Link: GS II — International Relations; GS III — Global economy

6. Evolving Technology Landscape

• The semiconductor industry is characterized by rapid technological advancements and shrinking process nodes.
• Staying competitive requires continuous investment in R&D and the ability to quickly adapt to new technologies.

UPSC Link: GS III — Science and Technology developments

Challenges — UPSC Perspective

Government Initiatives — Must-Memorise for Prelims

• India Semiconductor Mission (ISM)
• Production Linked Incentive (PLI) Scheme for Large Scale Electronics Manufacturing
• Design Linked Incentive (DLI) Scheme
• Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
• Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme
• National Policy on Electronics (NPE) 2019
• Scheme for setting up of Semiconductor Fabs in India
• Scheme for setting up of Display Fabs in India
• Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor ATMP / OSAT facilities in India
• FutureSkills PRIME Programme

Way Forward

• Foster a robust public-private partnership model, leveraging government incentives with private sector expertise and investment.
• Intensify international collaborations for technology transfer, joint ventures, and R&D, particularly with leading semiconductor nations.
• Establish dedicated ‘Semiconductor Universities’ or Centres of Excellence to create a pipeline of highly skilled talent tailored to industry needs.
• Develop a comprehensive ‘Fab-ready’ infrastructure policy, ensuring reliable power, water, and logistics for potential investors.
• Focus on niche areas like compound semiconductors, sensors, and design IP where India can gain a competitive edge in the short to medium term.
• Streamline regulatory processes and provide consistent, long-term policy stability to build investor confidence and attract sustained capital.
• Encourage indigenous R&D through grants, tax incentives, and academic-industry linkages to develop proprietary technologies and reduce reliance on foreign IP.
• Integrate semiconductor manufacturing with India’s broader ‘Make in India’ and ‘Digital India’ initiatives to create a synergistic ecosystem.

UPSC Value Addition

Prelims Practice Questions

Q1. With reference to Semicon 2.0, consider the following statements:
1. It aims to establish India as a global hub for semiconductor design and manufacturing.
2. The programme is structured around six key pillars, including ‘Machines & Materials’ and ‘Talent Development’.
3. It focuses solely on Silicon Fab manufacturing and does not include Compound Semiconductor Fabs.
Which of the statements given above is/are correct?

1. A. 1 only
2. B. 1 and 2 only
3. C. 2 and 3 only
4. D. 1, 2 and 3

Answer: B. 1 and 2 only — Statement 1 is correct: Semicon 2.0 explicitly aims to establish India as a global hub for semiconductor design and manufacturing. Statement 2 is correct: The six pillars include Design, Machines & Materials, Fab Establishment, ATMP/OSAT Strengthening, Research & Development, and Talent Development. Statement 3 is incorrect: Semicon 2.0 aims to attract various types of fabs, including Silicon Fab, Compound Semiconductor Fab, Display Fab, and Discrete Component Fab.

Q2. Which of the following terms is NOT directly associated with the semiconductor manufacturing process as described in India’s semiconductor initiatives?

1. A. Fab
2. B. ATMP/OSAT
3. C. 28nm-110nm node
4. D. Quantum Entanglement

Answer: D. Quantum Entanglement — Fab (Fabrication plant) is where chips are manufactured. ATMP/OSAT (Assembly, Testing, Marking, and Packaging / Outsourced Semiconductor Assembly and Test) refers to the post-fabrication processes. ’28nm-110nm node’ refers to the technology nodes or process sizes in chip manufacturing. Quantum Entanglement is a phenomenon in quantum mechanics and is not directly a term associated with the conventional semiconductor manufacturing process, although quantum computing might use advanced semiconductor technologies.

Mains Practice Question

✍ The approval of Semicon 2.0 signifies India’s strategic intent to achieve technological sovereignty in the critical semiconductor sector. Discuss the multi-faceted challenges in establishing a robust semiconductor ecosystem in India and suggest a comprehensive ‘way forward’ to overcome them. (250 words)

Approach: Begin by briefly introducing Semicon 2.0 and its significance for India’s technological sovereignty. In the first part, elaborate on the multi-faceted challenges, categorizing them into areas like high capital intensity, technology access, skilled workforce, infrastructure, global competition, and geopolitical risks. Provide specific examples or details for each challenge. In the second part, suggest a comprehensive ‘way forward’, focusing on actionable strategies such as public-private partnerships, international collaborations, talent development, infrastructure policy, niche specialization, regulatory stability, and indigenous R&D. Conclude by reiterating the long-term benefits of a successful semiconductor mission for India’s economic growth and national security.

Source: PIB (Press Information Bureau)

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