Since its independence drives industrialization, India has seen many challenges, not to mention the stale permission of Raj that has thwarted our growth, while China has gradually eliminated the past. We finally saw some conventional industrialization areas in the late 1990s, such as automobiles, pharmaceuticals, oil and gas. India has gained a reasonable expression of semiconductors based on valuable engineering talent and easy-to-linguistic leading companies in India to build manufacturing industries. As fate would have come into play, our socialist policies and the same bureaucratic approach did not create the necessary favorable environment. India missed a once-in-a-lifetime opportunity to capitalize on its huge potential marked early in the game. This also tucks the famous “brain drain” into a cushioned loophole, not to mention the reputational damage to the entire industry as we are still working to repair.
Past events have increased the gap between India and other countries as we piece together an ecosystem to encourage the country’s semiconductor chip manufacturing industry. During this time, another force captures our imagination and talent. The IT industry has seen exponential growth. However, this unprecedented boom in information technology has masked a key vulnerability: our increasing reliance on the strength of the IT services sector, which has damaged the resilience of the entire strategic sector. We just stopped looking for services beyond IT.
Although the rapid rise of IT sector has attracted attention, it has inadvertently shifted focus rather than building sovereign capabilities in semiconductor manufacturing, a drawback, and its implications are now echoing between defense systems, critical infrastructure and emerging technologies.
History lessons are a key guide to strategic readjustment. India’s recent policy move, handsome capital subsidies, has been praised by state-level incentives and has attracted attention from domestic companies in semiconductor manufacturing, an industry that was previously viable only in Western countries. However, the ongoing challenge lies in underdeveloped ecosystems that hesitate among potential stakeholders.
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This is where the paradox comes in: the main players want to wait until there is a strong local ecosystem to implement Fab Investments, and ecosystem development is inherently dependent on the existence of operating fabs. This periodic impasse can be addressed through targeted government intervention to quickly resolve ecosystem gaps. Time is crucial.
India has a vibrant first-generation entrepreneur ecosystem with proven risk appetite and innovation potential. However, in the semiconductor industry, exposure to neighboring opportunities is limited. The main catalyst for the transformation lies in strategic partnerships with established players from global semiconductor hubs, including the United States, Taiwan, South Korea, Germany, Japan, Singapore and Malaysia. With the right structure, this cooperative framework has the potential to become a powerful engine for skilled employment production, expanding beyond metropolitan centers to emerging industrial clusters that extend beyond Indian towns. Consider the overall meaning of the collapsed infrastructure in our city.
The key factor in the program is the participation of experienced professionals who understand the unique challenges MSMES faces in emerging technologies. Fortunately, India has a deep talent pool of veterans in the semiconductor industry who can effectively identify and guide promising first-generation entrepreneurs, thus bridging the expertise gap in this strategic sector.
India and Semiconductor-Celestial Kingdom’s existing bilateral agreements provide strategic opportunities for ecosystem development. Now is the time to take advantage of the kindness we have accumulated over decades. The systematic approach would involve successful MSME model benchmarking in these partner countries to determine parallel opportunities within India. This targeted analysis could help identify approximately 100 high-potential entrepreneurs from engineering clusters established in Bangalore, Hyderabad, Pune and Coimbatore. These selected entrepreneurs should have an immersive three-month program at the Global Semiconductor Manufacturing Center, working with similar MSMES to gain practical industry insights. Their mission is to develop a comprehensive business plan and potentially incorporate international partnerships that utilize complementary expertise. This deep-rooted technical expertise can bring victory to our industry.
Projects that demonstrate a 50% chance of success or higher probability may be eligible for preferential government financing through specialized channels. This initiative can acknowledge that not all participants can pursue semiconductor venture capital after intrusion, thus ensuring natural selection of loyal entrepreneurs with viable business models.
According to my estimates, the plan will require direct spending of Rs 25 crore and an additional Rs 125 crore to manage the project. Let’s assume that out of 100 companies in other semiconductor manufacturing centers, only 50 have started new businesses. Additionally, given the 50% success rate among these enthusiastic entrepreneurs, we can expect 25 such companies to build their businesses and expand them to $100 million in annual operations over the next 5 years. This will create a $2.5 billion industry in India that does not exist today. Imagination potential.
The existing “Contact with Supplier” initiative is currently conducted by a single-day event by major semiconductor equipment manufacturers and manufacturing companies with the Indian Procurement Office and can be extended to a comprehensive engagement platform. Industry associations across India should jointly expand these programs to effectively communicate the direct opportunities and long-term potential of the industry to realize potential ecosystem players. These introductory meetings should follow a intensive week-long workshop where promising entrepreneurs will provide detailed introductions to the chain of full value – from the subsystem and equipment manufacturing. Such capacity-building plans can be effectively designed and delivered by established semiconductor equipment manufacturers and manufacturing companies with Indian operations as they understand first-hand the local ecosystem challenges and requirements.
I put this idea there for all associations to read about the next event. Steal it.
Also read: Global competition for AI chips is intensifying. Where is India?
The Indian Semiconductor Mission (ISM) is a financial framework developed by the Ministry of Electronics and Information Technology (MEITY) – providing incentives for manufacturers of specialty gases, highly purified chemicals, engineered materials and equipment, a strategic catalyst for ecosystem development. The policy initiative is expected to have a cascading effect that attracts different players in the semiconductor value chain. The resulting multiplier effect will enhance the fundamentals of the ecosystem, create a compelling environment for new investments, and establish semiconductors as the main driver of India’s economic growth. This comprehensive approach will enhance national security capabilities while ensuring long-term technical self-reliance. This is a version of what I’m eager to be in India and these moves will go a long way to creating it.
The best time to start this program is 20 years ago. The next best time now is.
The author is the managing director of KAS Group.
