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The chips are still down

  • from Shaastra :: vol 01 issue 02 :: Mar - Apr 2022

India wants to be a manufacturing presence in the semiconductor industry, but the path to breaking in will be arduous.

In December 2021, the Central government unveiled a new semiconductor policy, offering financial incentives to attract investments in chip manufacturing. These specialised components are core to a range of products: cars, defence equipment, mobile phones and television sets, among others. Currently, India meets this demand entirely through imports, which has its risks: when supply chains were disrupted during the ongoing pandemic, several user industries faced a shortfall in chips, and were forced to cut production.

Several large players, including Intel, have responded positively to the new policy. But the semiconductor industry is an intricate, connected and specialised one and is currently concentrated in a few regions. Given the tall demands, unique operating dynamics and economics of semiconductor manufacturing, India's path to breaking in will be long.

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