According to some government data, India still outsources 100 percent of its semiconductors and 94 percent of its electronics including components. The initiatives of Digital India are looking forward to meet all the parameters to make India an electronics and semiconductor manufacturing hub. The positive news is that the nation is trying hard to unleash a sturdy and well-built chip design ecosystem, which can be further expanded to research and development for intellectual property and product development. The foundation is already present to craft a rock-hard manufacturing unit, but that can only happen with strong government initiatives and incentives. For instance, Taiwan offers a 90 percent subsidy on semiconductor manufacturing and India needs to travel long to achieve that. Although the government also passed a $10 billion incentive package for semiconductor manufacturing through which many global companies are investing in the country, there is a lot more to do with taxation and subsidies. In this regard, we spoke to Anurag Awasthi, Vice President (Public Policy, Government and Corporate Relations) at India Electronics and Semiconductor Association (IESA) on how India will turn into a leader in semiconductor manufacturing, how long the chip shortage will continue, and most importantly, the current impediments in the sector that needs to be taken care of.
Q. Can you please tell when IESA was founded and what is the core reason behind its formation? What are your mission and vision?
India Electronics and Semiconductor Association (IESA) is a premier Industry body in ESDM and Semiconductor space in India with the mind share of all stakeholders to include Industry, Central and State Governments, Academia as well as notable international organizations and associations. It came into existence in 2005. We are committed to augment the growth of the Semiconductor and ESDM sector in India, with a major focus on Academia, Services, Skill Development, Research, Product development, and market feasibility within the industry and related ecosystem in India. Nearly all of the major companies in the Semiconductor space are our members and we conduct marquee events known as National events on the Annual Tech Calendar of the country. Our vision is attuned to the overall vision of ‘Atmanirbhar Bharat’.
Q. With the help of the PLI incentive scheme of Rs 76,000 crore several global and Indian firms are now investing millions of dollars, but amid that positive vibes, there are a lot of impediments. So, what are your views on this aspect?
India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications. In 2021, India’s end equipment market stood at $119 billion in terms of revenue. It is expected to grow at a CAGR of 19% from 2021 to 2026. This demand is being pushed by the increasing pace of digital transformation among the country’s consumers, enterprises, and public sector through the adoption of new technologies, from advanced connectivity to content consumption to the cloud. These cover smartphones, PCs, wearables, cloud data centers, Industry 4.0 applications, IoT, smart mobility, and advanced telecom and public utility infrastructure. The Semiconductor policy in December 2021 followed by various policies as given out by the State governments has galvanized this effort towards self-reliance in this domain for the future.
Government policies including PLI, DLI, Electronics Manufacturing Clusters, and Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) are all being equipped to boost domestic design, manufacturing, and assembly. PLI and DLI are path-breaking initiatives by the government. The bottom line is self-sufficiency in skilling, design, manufacturing, and distribution. Despite the recent subsidies announced in this domain in the US and Europe and ratification of the ‘Chips Act’, Asia will maintain its presence in the world market as it has the wherewithal to control the volumes of chip production. To augment economies of scale, well-known Asian companies are establishing plants in other countries, while it will surely take some time for the outliers to set up and operationalize foundries/fab facilities as it is a complicated and time-intensive process. With the US and Europe leading in R&D, East Asia including Taiwan and Korea leading in manufacturing/OSAT, and China with its capital-intensive expertise in packaging and testing- the global value chains in this sphere are disjoint and disintegrated. The pandemic has stretched these supply chains. No single country is a repository of all processes and therefore, the challenges in this sphere are pronounced.
Q. There are mixed reports on when the chip shortage would come to an end as some are speculating by the end of this year and some are saying by the end of 2026. When do you think it will return to normalcy?
These issues are based on current trend metrics, geopolitics, and sometimes on speculation. As long as the global supply chains are not disrupted due to a conflict situation or any other global crisis, it’s difficult to predict. In realism, the demand-supply equation and robust global value chains will be the basis of any calculations for the future. Capabilities take a long time to build while intentions can change overnight.
Q. In the coming few weeks you are organizing yet another Vision Summit in Bengaluru. Kindly highlight what are its core objectives and goals.
IESA will be conducting the next edition of its flagship event - Vision Summit & India Embedded Electronics Show-(VS- IEES) on October 12 & 13, 2022 in Bengaluru. The event, in a new format, will not only comprise the conference but India Embedded Electronics Show (IEES) as well. This will constitute a mega exhibition and demonstrative events as part of the summit. The overall aim is to enable this event to become the 'CES’ of India, Embedded World of India, and 'MWC of India' all wrapped into one, over the next couple of years. With India aspiring to become the Electronics Manufacturing Capital of the world, and a Semiconductor Nation as envisaged by our Honorable PM, this mega event is being carefully curated and will be one of its kind, totally attuned to the vision and contours of ‘Atmanirbhar Bharat’. It will be two days of conference focused on the emerging Global Electronics and Semiconductors business, with Global keynote/session speakers, sharing their views and experiences.
It will comprise focussed discussions and ideation on Data Centres & IT, Telecom, Automotive, Fab/OSAT, Start-up, MSME, and Skill development initiatives. It aims to showcase States as well as their Electronics Ecosystems including Startups in this segment. The format will also have a mega exhibition with a fully enabled demonstrative platform for Semiconductor OEMs and their customers and it will be a platform for key announcements of new initiatives, product launches, key techno/ commercial announcements, etc. It is likely that suitable representatives from six countries and as many as seven states will take part in the VS-IEES 2022 as partners. In addition to this, several senior functionaries from the Central and State governments are also being invited to the event, which will add further value and perspective to the overall effort.
Q. As Vice President of Policy, Government, and Corporate Affairs, do you think policies and incentive packages are enough to attract investors and boost India's supply chain and manufacturing? Do you find any loopholes? What are your views?
The policies are always as good as the people who execute them and Rome was not built in a day as they say. The policies and incentive packages in my humble opinion are well thought out and carefully curated. They have been formulated with multiple stakeholder inputs with an astute vision and are easy to execute. While a lot needs to be done with India having large capacities and talent pool, two aspects of Skilling and Plugging into global supply chains will be the game changers in the future.
Q. What will be your prospects and roadmap for the year 2022 and beyond?
I am an eternal optimist. While one has been in uniform and served this nation for two decades, traveled the length and breadth of this country, and interacted very closely with young minds in India and abroad- the cerebral acumen in this country is unmatched. My prospects for 2022 and beyond are to see this glorious nation becoming self-reliant in semiconductors by 2027. We are a young democracy at 75 years- it is important to see where we’ve come so far and have a belief in our own capabilities.