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Indian electronics and semiconductor industries: Time to answer tough questions and find solutions

February 20, 2010

Another year and yet another union budget is close at hand! I’ve been receiving mails left, right and center from enthusiastic friends in the PR community who are trying to push their clients’ expectations on the budget.

Hold it for a moment! The IT sector alone does not make up India! Neither does semiconductor or VLSI or embedded! So, I am wondering — will all of those recommendations even get a look in? Solar PV probably would probably figure somewhere in the budget as it now has its own ministry — the MNRE. I’ll be very surprised, if solar PV is missing in this year’s budget.

Right, let me focus a bit on semiconductors and electronics. The rest will all fall in place if these two sectors are really paid greater attention.

The Indian semiconductor policy was announced back in 2007. Barring investments in solar PV, it has really not seen much movement. We did start a ‘national movement for fabs’ back in 2007-08, but all that seems to have fizzled out for now. As for solar PV, the National Solar Mission (NSM) was formally launched by the Prime Minister, Dr. Manmohan Singh, last month. This month, the Karnataka State Government has announced its own semiconductor policy at the recently held ISA Vision Summit 2010. So, we already have some notable policies in place.

Now, the Indian electronics industry seems to be looking at a $350-$400 billion opportunity by 2020 as far as the electronics consumption is concerned. As per available statistics, the current consumption stands at about $40-$45 billion. I am told, we have not made a very good use of the existing opportunity in the sense that only 3 percent of this $40 billion consumption of electronics goods is actually produced in India. How are we ever going to hit the so-called huge opportunity in front of us if we don’t start now? And most importantly, where exactly do we start from?

Policies are supposed to play the role of guiding lights. In the end, it is up to the industry to deliver, of course, with government support. It is for the industry to come up with roadmaps as to how it will reach a specific target during the time period marked in such policies. The real onus will be upon the industry — and how its ‘actual effectiveness’ is perceived, based on its local success — in the global markets, to attract newer investments.

Not for a moment should anyone confuse IT/ITeS with electronics manufacturing and semiconductors. IT/ITeS has its own success story! Nor for that matter should anyone feel that since we are strong in design services, we will have an easy path ahead.

IT/ITeS, and also satellite TV and telecom, have largely grown on their own strengths. Most importantly, all of them started back in the 1990s. Of course, the industry associations and regulations have had their roles to play. But, make no mistake. It will be a very different story as far as local electronics manufacturing, components and semiconductors are concerned.

Thoughts on the budget
Here are some thoughts on what the union budget should try to answer, if it will.

What steps will be taken to promote domestic electronics manufacturing in the country? What steps will be taken to boost the growth of electronic components in India? Time and again, I’ve noticed that electronic components are not even on anyone’s wish list! How can you even think of developing an ecosystem that fosters electronics manufacturing in the absence of a strong components ecosystem?

Next, what steps will be taken to develop the local markets? Rather, who’s responsibility should it be to develop the local markets — for local manufacturers? Are the local manufacturers ready enough to take on the global giants? How will they be protected? If not, what steps would likely be taken to make them self sufficient and globally competitive? How much money is India actually going to spend on semiconductor and electronics R&D? More importantly, will that R&D be on really cutting edge technologies?

Now, I really want to play some part in making certain things happen! That’s one of the many reasons why I was very pleased to meet Dongbu recently. I even went ahead and requested an X-Fab associate to find out whether this company would be keen on visiting and exploring the Indian market.

I am glad that the UKTI has made some efforts to connect UK based firms with those in India. However, these are early days, and much more needs to happen. I am trying to connect some companies here as well. It excited me even more to see Indian start-ups at Technovation 2010, and later, the industry experts encouraging engineering students to consider entrepreneurship as a career.

An acquaintance mentioned to me some time ago that we don’t even have enough and well,  trustworthy third-party statistics on the various segments! Much as I’d like to provide such statistics, I am merely an individual with limitations who can only do a very little bit, as I am neither an association, nor part of any media outlet. Nevertheless, I still try to do whatever little I can manage!

Coming back to the budget, this is the right time to answer tough questions and find meaningful, long term solutions.

One would be keen to know how the local market and manufacturing segments will get developed over the years. Or what kinds of efforts will be made to revive the electronic components industry. What kinds of high-tech R&D efforts will be made in the semiconductor and electronics domains, etc.?

Once such tough questions have been properly addressed, all sops, incentives and other tax breaks — of any kind — will look brilliant to the world, and attract the necessary investments.

I really would like to see the Indian electronics manufacturing and semiconductor industries, along with electronics components, to take off! I hope I made some sense!

  1. S.debbarma
    February 23, 2010 at 12:38 am

    Semiconductor Fabs in India??????
    Many scientists of India worked extensively thinking on the development of the nation one fine day in future and create lots of resources to help building nation’s semiconductor manufacturing,but at the end of their retirement life they feel they have not seen the light in their entire life’s hard work.
    Scientists,professors retires but the word semicon fabs never appeared practically in India.
    Youngsters grow their thoughts while in schools during their engineering studies that one fine day they will have their own career in semicon fabs in the country….ultimately no chance in life to see the wafers with circuits.

    A country of 1.3 billion population can not even provide clean water and electricity to its citizens,do you think they can build a fabs which requires lotsa electricity and clean water?

    Wireless communication in india is very successful…but there is always ??? when we talk abt semicon fab.
    Mera bharat Mahan….

  2. February 23, 2010 at 6:30 am

    Quite agree with you, Mr Debbarma. Perhaps, we are never going to see a fab! 🙂 But well, you never know.. Someone may have some bright ideas, some day!

  3. Dhawal Mahajan
    February 24, 2010 at 6:20 am

    Hi Pradeep,

    I totally agree with your positive and yet down to earth points on the semiconductor industry in India. I don’t want to be a very pessimistic person here but I would like to shed some light on this based on my experience. I have been a part of the nanotechnology initiative by Govt of India(with Rs. 50 crore budget)at IIT Bombay and my masters project was on making an ion implanter for the 130 nm process. What I found that Indian’s are lacking is this:

    1. The people/professors of 60’s till 80’s batch still have that babu mentality. They might have the self confidence but completely lack in systematic effort targeted at how to make the “things happen”. Also despite the fact that their guidance matters a lot, their expectation from the new generation is that they should also adopt their favorite “babu” mentality.

    2. The new generation is what we can then count on. But wait! The quota system for the reserved caste’s first of all takes away all the fun of it; or should I say the soul of achievement – sense that there is a fair evaluation of your caliber in a particular exam etc. So there isn’t actually any incentive for youngsters to flourish and I have even seen many of my fellow IITians who I think didn’t deserve the seat in the first place. Accept it or not but this quota system needs complete overhaul in the sense that a candidate’s economic background should be considered instead of the caste.

    3. There is another disturbing trend in my generation – anybody who can operate a computer and code some basic programs and has got some IT job is not somebody great. We must change this notion that working in IT/semiconductor field is superior than other fields. We see so many civil, mechanical etc engineers taking IT sector just because of the money they get! Sick mentality!! I am not saying that money is bad but at least stay loyal to what you had aimed for, or is it that you just got the seat through quota and thought “What the heck I will just complete BE in 5 or 6 etc yrs and then do some diploma and got for an ‘IT’ job”. Indians, my brother’s and sister’s this is weak and cheap mentality and won’t take us anywhere as a nation.

    In nutshell, I would like to say that until we don’t learn the working attitude from the west, we won’t be able to have any of our dreams fructified. I didn’t intend to just criticize us – the Indians, but if something is rotten in ourselves then we must strive “now”.


  4. Wahrsagerin
    March 7, 2010 at 9:12 pm

    Thanx for the information!!

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