In the past few years, India has witnessed an applaudable escalation in in-house production of electronics goods, but in spite of this augmentation, the country is still dependent on imports of electronic components from other countries. It shows that although several advancements are taking place in manufacturing and technology, there are still various challenges that are disturbing the ecosystem. Beneath a competitive price, manufacturers have to produce devices in large quantities, and then there is a lack of investment to manufacture ICs, an ineffective transport system coupled with supply chain problems, and the power supply is very scanty. Then, semiconductors, which are known as the backbone of every modern electronics item were also ignored in the country for a very long time. In the past twenty years, hardly any steps and decisions have been taken to strengthen this ecosystem. But, back in December 2021, the government unleashed Rs 76,000 Crore incentive package under the PLI scheme to fortify the semiconductor industry. But, several experts still believe that this is not enough to build the ecosystem from scratch. In this regard, we spoke to Faisal Kawoosa, Senior Research Analyst and Founder at techArc about how to build and strengthen the semiconductor ecosystem in India, the imperative strategies that are still overlooked, and along with this how we can toughen the electronics manufacturing industry more.
Q. The EMS and semiconductor industry in India has witnessed a huge improvement in the past few years, but somehow experts feel there are various cracks in the sector. In this regard, what do you think are the real problems troubling the industry and how do we solve it?
The biggest issue I feel is the availability of funds and investments. If you carefully look at the ecosystem, you will see it’s more software-centric in India. You hear a lot of unicorns and other things happening, billions and millions of investments taking place, those are all mostly happening on the software side or what is known as Saas. So, investors also overwhelmingly don’t understand this space of EMS and semiconductors and this brings disadvantages for these sectors. Even the global players who are now considering India as their options are not also investing in the full throttle. They are also talking of very small sums when they think of investing in India in this domain. Secondly, for EMS partners specifically, demand estimation is a nightmare, especially after an erratic supply chain. So, what kind of set-up they should have, and what should be their capacity, becomes a huge challenge for them. For the semiconductor industry, I think that’s mostly insufficient investment in the entire ecosystem and strategically we should have now a FAB set up in India. While we are laying down long prices and projects, plans and strategies this domain is so dynamic that we should be continuously and regularly monitoring so that we can bring in tactical changes.
Q. There are now enhancements in technology in India, especially in the domain of semiconductors and electronics. Where do you see the improvements in technology at this point?
India now has a proven track record in services, software, and nowadays semiconductor, the software part is becoming paramount and that’s where I think the strength of India lies. The market conditions are also ripening in favor of India as the business model is changing. I think it’s just a matter of time before you will see a thriving semiconductor industry in India and also further enhance its role in the semiconductor value chain. Definitely, the nation is improving these ecosystems, but when it comes to the development of technology, we don’t see much investment in building R&D. Now, when the National Policy on Electronics (NPE) 2019 was altered back in 2019, it aimed to develop more top-notch technology for which investments were already taking place. In fact, the government is now working closely with numerous global players to perk up its electronics, semiconductors, and e-waste technology. The point to be noted is that we cannot make India globally competitive in these domains unless we try to produce more semiconductors within the country.
Source: Oppo Plant (Noida)
Q. To boost the Indian semiconductor ecosystem, the government has recently unleashed the PLI incentive of $10 billion. Do you think this step is enough to build the ecosystem? What are the strategies required?
This is definitely a huge incentive scheme to push forward the semiconductor industry growth in India. Now the government's putting equal into 10 billion dollars means a minimum of overall 20 billion dollar investment assuming that private partners will also make equal contributions, but however, in reality, they make much more profit than what govt incentive goes around. From an incentivization point of view, I think this is a good enough money, but probably there are other things that are also required other than creating a long-term horizon. The need is that we constantly keep on checking the global scenario and the kind of objectives in the short term as well. I am sure the India Semiconductor Mission (ISM) which has been set-up to build up the industry, the focus is now there, which was earlier missing. Also, it will magnetize huge investments in electronics components and ATPM (assembly, testing, packaging, and marking). The major USP of this scheme is that domestic manufacturers will be able to attract more customers at a subsidized cost.
Q. What Kind of new technologies India now should look for to spearhead its electronics and semiconductor manufacturing in the global space?
On the electronics-specific part, I think some sectors and products are doing well. For instance, like the mobile segments and in the last 2-3 years we now have SMT segments in India. I personally view it as a TAME model: Trade, assemble, manufacture and engineering. Engineering has also improved in the past few years, and designs for mobiles and other devices are also happening in India, but maybe other domains and products are not at this stage. Again on the semiconductor side, I wouldn’t say that we are lacking everywhere in this domain in India, yes we don’t have a fab, but whatever designs and verification we are doing in this industry we are doing it for the latest technology and nodes. The ecosystem remains incomplete unless we have a fab.
Q. The electronics manufacturing market now also involves AI, IoT, and robotics. With the help of these technologies, where do you think India will see its growth and how it will deploy these technologies?
The consumer electronic devices, which are now furnished with AI, IoT, robotics need hardware and we need to have India specific hardware clusters from many aspects and that is where we will see the growth. Probably 5-6 years back, we only had a smartphone and a laptop to buy and today we have almost 16 smart devices to buy. This implies a lot of scope and opportunities for electronics manufacturing. But, the other aspect we have to keep in mind is how these things are changing the scenario of manufacturing, which is also getting automated and robotized. This means our old narrative and pitch of having skilled man force and manpower isn’t going to be a key differentiator upon which we can sell to the world in the near future because a lot of processes don’t require humans or sometimes don’t require too many people. Factories are now becoming cleaner and more compact. A lot of changes are happening in the global scenario in manufacturing, which will have a huge impact on Indian manufacturing. There is a need also to start positioning as a high-tech manufacturing place where we will be capable of quickly ramping up and modernizing our manufacturing.
Source: Pixabay
Q. Finally, why have you founded techArc and what do you want to achieve?
I now come with eighteen plus years of experience in market research and I believe that in the era of modern technology, the time of conducting market research in the conventional process is not that fruitful, where we would reach out to people and get their responses, views, and opinions. Now, at this time a lot of data is already in the air and as more technology deployments happen, apps are being used along with IoT. A lot of data is already available and without getting into the previous you can solve a lot of market research problems and that is where techarc comes in. We today leverage a lot of what is known as research technology partners and that helps us achieve our mission where we want to be the most precise, accurate, and provide credible information and insights to our clients, which is only possible through leveraging more and more technology. Techarc – Technology Analytics, Research & Consulting is a new-age technology market research firm offering insights and information services to decision-makers offering them a neutral and unbiased perspective about the market, product, or service. The focus areas of Techarc include Consumer Tech, Deep Tech, Digi Tech, Edu Tech, Auto Tech, and Assistive Tech. Techarc offers subscription-based services as well as executes ad-hoc research projects in these domains.
