India has strong potential to succeed in repetitive manufacturing and become a semiconductor hub: Jefferies

New Delhi [India]March 15 (ANI): Favorable government policies, growing demand, low-cost production capacity and strategic links to Western countries make India a semiconductor hub development, according to a recent Jefferies report.

According to the report, government fiscal incentives, low manufacturing costs, talented design labor and growing demand are the advantages factors that help the industry.

“We believe that India has the strong potential to repeat its manufacturing success in the automotive to semi-finals under the leadership of policy support, growing demand, low costs and strategic goodwill with the West,” the report said.

The report added that the desire of these countries to be a major player in the semiconductor manufacturing industry is gaining huge momentum, with more than $18 billion in investments.

The investments are spread across five key projects, including Tata Electronics and Taiwan’s $11 billion chip factory, which will begin operations in 2026.

According to Jefferies’ interaction with the government, it added that the Indian government aims to four times the production of electronics to $500 billion by 2030.

The report added that the Indian electronics sector has witnessed rapid growth driven by increased revenue, digital adoption and rising demand for electronics.

In the fiscal year 2024, India’s electronic imports reached US$60 billion, accounting for 25% of the country’s trade deficit, second only to oil.

This prompted the Indian government to take a bold stance on domestic electronic manufacturing, focusing on strengthening production and reducing import dependence.

Major policy drivers from the government include the launch of a $10 billion incentive program in 2021, aiming to cover 50% of the project costs of chips and display plants, as well as testing facilities. Some states offer up to 20% additional incentives, bringing the full fiscal support of these projects to an impressive 70%.

The results have been seen: five semiconductor-related projects are under construction, involving a total investment of US$18 billion. The report added that the projects are expected to create approximately 80,000 direct and indirect jobs, which contributes to the growth of India’s semiconductor ecosystem.

The report added that India’s efforts are focused on expanding the entire semiconductor supply chain, from chemicals and gases to components and equipment.

In its interaction with credit rating agencies, Railways and Electronics Minister Ashwini Vaishnaw highlighted the government’s strong focus on building this complete ecosystem, leveraging India’s design capabilities and attracting global players to the market.

The report added that while India’s semiconductor industry is still in its early stages, it strategically leverages good technology rather than aiming to compete with the world’s most advanced nodes. This approach reflects India’s success in the automotive industry.

The report noted that in the 1980s, India faced major challenges in starting automobile manufacturing, but with the right policies and growing domestic market, the country is now the fourth largest producer and auto exporter of automobiles. The same blueprint may apply to the semiconductor sector.

However, the report also mentions challenges that hinder the development of the industry, such as underdeveloped supply chains, limited manufacturing expertise and global competition. (ANI)