Yet another electronics policy for India?

October 26, 2012

India has once again announced an Electronics Policy, and frankly, I’ve lost count, how many times! Nevertheless, one hopes that this policy somehow takes off, and helps India get off the ground!  There are certain points in the policy that are worth a relook.

One, the setting up of electronic manufacturing clusters. This has been time and again stressed and re-stressed. Will it come around, this time? Let’s wait and watch, if it happens this time!

Two, as per the policy, there is a proposal for setting up two semiconductor wafer manufacturing fabrication facilities. Where? As far as one knows, there is hardly any infrastructure around to support even one semicon fab! Some people may say, Bangalore, but well, they are welcome to say that! As for people buying more of ‘domestically manufactured electronic goods’, it remains to be seen!

Three, back in 2007, when the SIPS program was announced, there were great expectations! If you recall some time ago, I mentioned that the Indian semiconductor policy, announced back in 2007, had supposedly expired on March 31, 2010! Then, the Indian industry came up with recommendations that included extending the Indian semicon policy up to March 2015! So, what happens to that? Or, is it dead and buried?

Four, back in 2007, the ‘ecosystem units’ were clearly defined as units, other than a fab unit, for manufacture of semiconductors, displays including LCDs, OLEDs, PDPs, any other emerging displays; storage devices; solar cells; photovoltaics; other advanced micro and nanotechnology products; and assembly and test of all the above products. What’s happening now?

Five, does all of this mean that the role of India-based semiconductor companies as a percentage of the semiconductor market globally, will improve? Or, do we take India as a system/gadget maker and thus, as a percentage of that market??

Six, fabrication is increasingly expensive, much involved and the actual global fabrication players are declining and will be about three to four companies. There is talk of 450mm fabs across the world! Have we even heard a word from India?

Okay, so let’s say, India will have two fabs? By when? What process technology? If it is a 450mm fab, India can very well kiss goodbye to this decade, at least. And, India continues to slip back in having a ((proper) fab!
What should India do?
If India produces domestically consuming gadgets, that are more India specific, that could need devices available less outside. For that purpose alone, a local fab could be essential. However, such requirements appear less each day!

Again, to the point of sounding boring and repetitive, fabless semiconductor could be the way forward for India. However, in terms of India becoming a global player through such chips conceptualized in India, for India and the world, the chance is lesser, for now!

Hasn’t the Indian semiconductor industry been shouting ‘fabless’ from the rooftops for some years now? In terms of having India-based companies working toward developing chips, in terms of smaller, analog, components that are crucial, and in terms of having IP-based companies, and, in terms of increasing service companies, yes, India is ahead!

Many more companies are coming up, and some started directly here. However, the answer to the question remains NO in terms of having chips come out of India, as yet!

Let us also look at the key growth drivers in Indian electronics, especially, since we are talking about fabless and fab-lite. The obvious one is to develop solutions for the India market. It is likely that these can be for outside markets as well. This ability will make India develop solutions for global markets. These are not semiconductors per se, but, (embedded) solutions, a strong point for India!

The situation described above can lead to developing a fabrication and manufacturing ecosystem in India. India should try to position itself at the higher end of the solutions, markets, services, etc., so that its value contribution can be much more.

There are six government initiatives in the new plan: development of wafer fabs, Modified Special Incentive Package Scheme (M-SIPS), development of manufacturing clusters, Preferential Market Access Policy, Electronics Development Fund and developing National Electronics Mission.

What’s new here? These are all old stories, and not worth repeating! The time is now for action!

Friends, is there a way out of the current situation that India finds itself? Would be interesting to hear your comments!

  1. Samaresh
    October 26, 2012 at 8:38 am


    Agree with your ‘skepticism’ laced open optimism.. 🙂

    * As long as these clusters (point 1) are treated as eponymous for land deals, we will just NOT grow.. come what may.. (see fab city, other SEZs where the excitement/focus was more on the ’30 percent’ for real estate building)

    * Similarly point 2 – multi-fabs, well, you said it… currently the ONLY place a fab can come up is in Gujarat – all due to the boss’ vision.

    * As we do not (yet) have the manufacturing ‘mind set’ and infrastructure (Karbonn, Micromax are Taiwan done, India labeled, right?) the chance of we reaching out to India market or nearby third-world markets continues to be less (A ‘pad’ at 5/6k has a market, and so does a 40k ‘iPad’, similarly phones).

    Once we have systemic mindset, which will also mean need for more local chips, which in turn could increase India’s international share/contribution… which in turn can, inevitably, go to a fab.

    • October 26, 2012 at 2:48 pm

      Thanks! What else to do? This has become a ‘pattern’, with some policy getting announced each year, literally! Nothing’s happened so far. Am hopeful, something’s gotta give!

      Don’t you now go ‘easy to say. difficult to manage’! 😉

  2. Hillol Sarkar
    October 26, 2012 at 11:40 am

    India with a population of 1.2B will have full scale Electronics infrastructure. Software is a commodity in Cloud. So wireless cloud management system will require devices. Do not need 10 nm.

    • October 26, 2012 at 2:55 pm

      One hopes the policy makers are listening! 😉

  3. Mark
    November 16, 2012 at 10:18 pm

    Hello Pradeep,

    You write from a position of knowledge and reason. As for ‘what should India do?’, perhaps more focus on getting the right parties to work together toward common a objective.

    Government must take the lead in developing the right initiatives – that increase productivity and competitiveness at local, national, international levels. There is currently a lot of infighting and corruption that must be eliminated, or at lease set aside.

    As for your comment on the number, and frequency of, policies the Indian government churns out (I agree, they make one’s head spin) more attention should be made to create coherency in policy directives to coordinate efforts made by different ministries, the private sector, institutions, research and academic circles.

    Increase core spending on sector related technology/R&D and better understand future global electronics sector needs, demands/trends. Perhaps, also, more decentralized decision-making with more privatization.

    Government should also offer [adequate] financial initiatives to incumbent Indian companies in industry and MNCs, including human resource development – as well as from international industry agencies and donor groups/individuals to join in and help drive efforts forward. This effort would be an investment, not an expense.

    Also, ‘real’ encouragement of partnerships and foreign technology-based venture capital investments.

    This can be done through better corporate rewards for the private sector to play an active role in producing a continuous stream of innovative electronics sector ideas and models conducive to the dynamic Indian business environment.

    Effective laws and enforcement measures protecting IP rights are also important.

    Attention to upgrading basic technical infrastructures and better access for links to knowledge sources and international industry networks is key as is a system of awards and prizes at the national level to encourage regional and international electronics-market entry, performance and innovation

    India’s private sector must also get better at collaborating with universities and research centers with new technology initiatives, and invest more in startups. Businesses must host specially designed training programs and applied research programs for students that include collaborating with local universities with a focus on electronics sector vocational training and the continuing education of technical and upper-level electronics industry decision-makers.

    There’s much, much more room for improvement opportunities. India’s success is hers to lose.

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