DRDO to Lead Semiconductor Session at ESTIC-2026: Key for UPSC

13 Oct DRDO to Lead Semiconductor Session at ESTIC-2026: Key for UPSC

✎ Semiconductors are critical to India’s digital sovereignty; the Semicon India Programme and PLI Scheme aim to reduce import dependence and establish India as a global hub for electronics manufacturing.

Subject Relevance — Where This Topic Fits

• GS Paper II — International Relations (Global Technology Governance)  |  GS Paper III — Science and Technology (Indigenisation, Electronics Manufacturing)  |  GS Paper III — Economy (Industrial Policy, FDI, Supply Chain Resilience)
• Prelims: Semiconductor Mission India, Production-Linked Incentive Scheme for Electronics, Critical Information Infrastructure, Electronics Manufacturing Clusters, National Policy on Electronics 2023
• Essay: The Role of Technology in National Security and Economic Sovereignty, Globalisation vs. Self-Reliance: The Case of Semiconductor Manufacturing

Quick Revision: Semiconductors are critical to India’s digital sovereignty; the Semicon India Programme and PLI Scheme aim to reduce import dependence and establish India as a global hub for electronics manufacturing.

Why is this in the news?

India’s strategic focus on semiconductor self-reliance, technological sovereignty, and integration into global electronics supply chains continues amid geopolitical shifts and supply chain disruptions.

Background

• Semiconductors are the foundational building blocks of modern electronics, powering devices from smartphones to advanced defence systems, and are critical to India’s digital transformation and national security.
• The global semiconductor industry is projected to exceed USD 1 trillion by 2030, with supply chain vulnerabilities exposed by the COVID-19 pandemic and geopolitical tensions, prompting nations to pursue self-reliance in critical technologies.
• India’s semiconductor ecosystem has historically been import-dependent, with over 90% of chips sourced from global manufacturers, making it vulnerable to supply chain disruptions and geopolitical risks.
• The Government of India launched the Semicon India Programme in December 2021, with a financial outlay of INR 76,000 crore, to establish semiconductor and display manufacturing facilities in India under the Production-Linked Incentive (PLI) Scheme.
• International collaborations, such as the India-EU Trade and Technology Council (TTC), are being leveraged to foster innovation, R&D, and technology transfer in critical sectors, including semiconductors.

What are Semiconductors and Next-Generation Chips?

• Semiconductors are materials with electrical conductivity between conductors and insulators, essential for the fabrication of integrated circuits (ICs) that power electronic devices.
• Next-generation chips refer to advanced semiconductor technologies such as System-on-Chip (SoC), 3D NAND, neuromorphic computing chips, and quantum computing processors, which enable higher performance, energy efficiency, and novel applications.
• The semiconductor value chain comprises design, fabrication (foundries), assembly, testing, and packaging (ATMP), with each stage requiring specialised infrastructure, capital, and expertise.
• India’s semiconductor strategy focuses on attracting global semiconductor manufacturers to set up fabrication units (fabs) in India, enhancing domestic design capabilities, and developing a robust semiconductor ecosystem through R&D and skill development.
• Key challenges in India’s semiconductor journey include high capital expenditure, technological complexity, competition from established hubs like Taiwan, South Korea, and the US, and the need for a skilled workforce and robust infrastructure.
• Institutions such as the Indian Semiconductor Mission (ISM), the Centre for Development of Advanced Computing (C-CDAC), and the Indian Institute of Technology (IITs) play pivotal roles in driving R&D, skill development, and ecosystem building.
• The PLI Scheme for Semiconductors and Display Manufacturing offers fiscal incentives to eligible companies, including 50% of the project cost for setting up semiconductor fabs and ATMP units.

Key Features

Feature	Significance
Thematic Session at ESTIC-2026	Provides a platform for India to showcase indigenous semiconductor and next-generation chip capabilities, fostering international collaboration and knowledge exchange.
Leadership by DRDO	Demonstrates the Defence Research and Development Organisation’s role in advancing critical technologies, aligning with India’s self-reliance (Atmanirbhar Bharat) objectives in strategic sectors.
Focus on Semiconductors & Next-Gen Chips	Highlights India’s strategic priority to develop a robust semiconductor ecosystem, addressing supply chain vulnerabilities and reducing import dependence.
Global Participation	Facilitates engagement with international stakeholders, including industry leaders, academia, and policymakers, to accelerate technological advancements.
Policy-Advocacy Component	Opportunity to align domestic semiconductor policies with global best practices, ensuring regulatory frameworks support innovation and commercialisation.

Why it Matters

Strategic Autonomy

• Semiconductors are classified as a critical technology under India’s Strategic Trade Policy, essential for defence, space, and digital infrastructure.
• Reduces vulnerability to geopolitical supply chain disruptions, exemplified by recent global semiconductor shortages.
• Supports India’s ambition to become a global hub for semiconductor manufacturing and design.

Economic Growth

• Semiconductor industry is projected to contribute $100 billion to India’s GDP by 2030, per industry estimates.
• Creates high-skilled employment opportunities in R&D, manufacturing, and allied sectors.
• Enhances India’s position in global value chains, attracting foreign direct investment (FDI) and technology transfers.

Technological Sovereignty

• Next-generation chips (e.g., AI accelerators, quantum computing components) are pivotal for India’s digital transformation and AI-driven governance.
• Supports indigenous development of semiconductors for critical applications in defence, space, and telecommunications.
• Reduces reliance on imported proprietary technologies, enhancing national security.

International Collaboration

• ESTIC-2026 serves as a multilateral forum to forge partnerships with countries like the US, Japan, and South Korea, which dominate the semiconductor supply chain.
• Facilitates joint ventures and technology-sharing agreements to accelerate India’s semiconductor ecosystem development.
• Aligns with India’s participation in global initiatives such as the Semiconductor Industry Association (SIA) and Quad semiconductor supply chain initiatives.

Challenges

1. Supply Chain Dependence

• India imports over 90% of its semiconductor requirements, making it vulnerable to global supply chain disruptions.
• Limited domestic manufacturing capacity for advanced nodes (e.g., 5nm and below), constraining self-sufficiency.
• Critical raw materials (e.g., silicon wafers, rare earth metals) are sourced from a handful of countries, posing geopolitical risks.

UPSC Link: GS3: Technology Missions, Industrial Policy

2. High Capital Investment

• Semiconductor fabrication plants (fabs) require investments of $10–20 billion, posing financial challenges for private and public sectors.
• Limited availability of risk-taking capital for high-risk, long-gestation projects in the semiconductor sector.
• Need for government incentives and subsidies to attract global players like TSMC and Intel to set up operations in India.

UPSC Link: GS3: Investment Models, Start-up Ecosystem

3. Skill Gaps and Talent Shortage

• Shortage of specialised workforce in semiconductor design, fabrication, and testing, with only a handful of institutions offering relevant programmes.
• Brain drain of skilled professionals to foreign markets due to better remuneration and career opportunities.
• Need for revamping technical education curricula to align with industry requirements in semiconductor technologies.

UPSC Link: GS2: Education Policy, Skill Development

4. Regulatory and Policy Hurdles

• Complex regulatory frameworks for land acquisition, environmental clearances, and labour laws, delaying project implementation.
• Lack of a cohesive national semiconductor policy with clear incentives, tax structures, and dispute resolution mechanisms.
• Need for streamlined approval processes to expedite the establishment of semiconductor manufacturing units.

UPSC Link: GS2: Governance, Policy Implementation

5. Global Competition

• Intense competition from countries like China, South Korea, and the US, which have established semiconductor ecosystems with significant government support.
• Risk of overcapacity in the global market, leading to price wars and reduced profitability for new entrants.
• Need for India to identify niche areas (e.g., compound semiconductors, packaging) where it can compete globally.

UPSC Link: GS3: Industrial Policy, Global Trade

Challenges — UPSC Perspective

Issue	Concern
Capital Intensity	High upfront investment deters private participation without robust government incentives.
Supply Chain Bottlenecks	Dependence on imported raw materials and equipment creates vulnerability to geopolitical risks.
Talent Shortage	Insufficient skilled workforce and brain drain hinder indigenous capability building.
Regulatory Delays	Complex approval processes and land acquisition challenges slow down project execution.
Global Competition	Established semiconductor powers dominate the market, making it difficult for new entrants.
Technology Gaps	Limited domestic R&D in advanced semiconductor nodes (e.g., 3nm and below) compared to global leaders.

Way Forward

• Establish a dedicated Semiconductor Mission under the Ministry of Electronics and Information Technology (MeitY) to coordinate policy, funding, and implementation.
• Offer Production-Linked Incentive (PLI) schemes tailored for semiconductor manufacturing, with extended coverage for R&D and design.
• Develop a National Semiconductor Talent Development Programme in collaboration with IITs, NITs, and industry partners to address skill gaps.
• Streamline regulatory approvals for semiconductor fabs through a single-window clearance mechanism under the National Single Window System (NSWS).
• Foster public-private partnerships (PPPs) to set up semiconductor fabrication units, leveraging India’s large domestic market as an anchor demand.
• Invest in critical infrastructure such as semiconductor testing and packaging facilities to complement fab development.
• Promote indigenous R&D in semiconductor technologies through grants and collaborations with DRDO, IISc, and international research institutions.
• Align India’s semiconductor policy with global standards (e.g., ISO, ITU) to enhance export competitiveness and attract FDI.

UPSC Value Addition

Prelims Practice Questions

Q1. Consider the following statements regarding the Semiconductor Policy of India:
1. The policy aims to attract investments in semiconductor and display manufacturing by providing fiscal support.
2. The Production-Linked Incentive (PLI) Scheme for semiconductors includes a fiscal support of up to 50% of the project cost for setting up semiconductor fabrication units.
3. The policy mandates that all semiconductor manufacturing units must be located within Special Economic Zones (SEZs).

How many of the above statements are correct?

1. Only one
2. Only two
3. All three
4. None

Answer: Only two — Statement 1 is correct: The Semiconductor Policy of India, under the PLI Scheme, provides fiscal support to attract investments in semiconductor manufacturing. Statement 2 is incorrect: The PLI Scheme for semiconductors offers fiscal support of up to 50% of the capital expenditure for setting up semiconductor fabrication units, not 50% of the project cost. Statement 3 is incorrect: The policy does not mandate that all units must be located within SEZs; it allows flexibility in location.

Q2. Assertion (A): The Defence Research and Development Organisation (DRDO) is the nodal agency for implementing India’s National Semiconductor Mission.
Reason (R): DRDO has been tasked with leading the thematic session on ‘Semiconductors & Next-Gen Chips’ at ESTIC-2026, reflecting its strategic role in this sector.

Options:
A. Both A and R are true, and R is the correct explanation of A.
B. Both A and R are true, but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.

Answer: ? — Assertion (A) is false: DRDO is not the nodal agency for implementing the National Semiconductor Mission; the nodal agency is the Ministry of Electronics and Information Technology (MeitY). Reason (R) is true: DRDO is leading a thematic session on semiconductors at ESTIC-2026, highlighting its role in strategic technology domains.

Q3. Match the following initiatives with their respective objectives:

Column I (Initiative) | Column II (Objective)
——————————————-|——————————————-
1. National Semiconductor Mission | A. Promote indigenous manufacturing of high-end chips
2. Production-Linked Incentive (PLI) Scheme| B. Provide fiscal incentives for semiconductor manufacturing
3. Make in India | C. Enhance self-reliance across manufacturing sectors
4. Atmanirbhar Bharat Abhiyaan | D. Attract investments in electronics manufacturing

Options:
A. 1-A, 2-B, 3-C, 4-D
B. 1-B, 2-A, 3-D, 4-C
C. 1-A, 2-D, 3-B, 4-C
D. 1-C, 2-B, 3-D, 4-A

Answer: ? — 1-A: The National Semiconductor Mission aims to promote indigenous manufacturing of high-end chips. 2-B: The PLI Scheme provides fiscal incentives for semiconductor manufacturing. 3-D: Make in India is a broader initiative to attract investments across manufacturing sectors, including electronics. 4-C: Atmanirbhar Bharat Abhiyaan seeks to enhance self-reliance across sectors, including manufacturing.

Mains Practice Question

✍ The Government of India has prioritised the development of the semiconductor and electronics manufacturing ecosystem as a strategic imperative under the Atmanirbhar Bharat Abhiyaan. In this context, critically examine the significance of the Semiconductor Policy of India, including the Production-Linked Incentive (PLI) Scheme, for achieving self-reliance in critical technologies. Also, analyse the role of institutions like DRDO in fostering innovation in this sector. (15 Marks)

Approach: MODEL-ANSWER SKELETON:

1. **Introduction (2 marks)**
– Define semiconductors and their critical role in modern electronics, defence, and strategic autonomy.
– Contextualise India’s semiconductor policy within the broader framework of Atmanirbhar Bharat Abhiyaan and the National Semiconductor Mission.

2. **Significance of the Semiconductor Policy of India (5 marks)**
– **Strategic Autonomy**: Reduce dependence on imports for critical components (e.g., chips for defence, space, and consumer electronics).
– **Economic Growth**: Leverage the global semiconductor market, projected to exceed $1 trillion by 2030, with India targeting a share of 10%.
– **Employment Generation**: Direct and indirect job creation in R&D, manufacturing, and ancillary sectors.
– **Supply Chain Resilience**: Mitigate disruptions in global supply chains, as evidenced during the COVID-19 pandemic.
– **Fiscal Incentives**: Highlight the PLI Scheme’s provisions: up to 50% of capital expenditure for semiconductor fabrication units and 25% for display manufacturing.

3. **Role of the PLI Scheme (4 marks)**
– **Fiscal Support**: Break down the financial incentives (e.g., 50% capital subsidy for setting up fabs, 25% for display fabs).
– **Attracting Investments**: Examples of global semiconductor firms (e.g., Micron, Foxconn, Tata Electronics) committing investments under the scheme.
– **Challenges**: High capital intensity, global competition, and the need for a skilled workforce.
– **Comparative Analysis**: Contrast India’s approach with global peers (e.g., US CHIPS Act, EU Chips Act).

4. **Institutional Role: DRDO and Innovation (3 marks)**
– **DRDO’s Strategic Focus**: DRDO’s involvement in high-end chip design, defence electronics, and next-generation technologies (e.g., GaN-based chips for radar systems).
– **Collaboration with Academia and Industry**: Highlight partnerships with IITs, IISc, and private sector for R&D (e.g., DRDO’s Semi-Conductor Laboratory in Chandigarh).
– **ESTIC-2026**: Explain the thematic session’s role in fostering dialogue between policymakers, industry, and academia to accelerate innovation.

5. **Conclusion (1 mark)**
– Summarise the policy’s potential to position India as a global semiconductor hub while acknowledging implementation challenges (e.g., infrastructure, regulatory hurdles).
– Emphasise the need for sustained investment in R&D and human capital development.

Source: PIB (Press Information Bureau)

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