India Targets $300 Billion Domestic Electronic Production By 2026 But That Requires Importing Semiconductor Chips Worth At Least $58 Billion

So what is India's import bill on semiconductors?

In a written reply to Rajya Sabha on Friday (Feb 11), the Minister of State for Electronics and IT Rajeev Chandrasekhar on Friday stated that electronic chips worth Rs 1.1 lakh crore were consumed in India in 2020 as per industry estimates.

Chandrasekhar acknowledged that India's entire domestic demand was currently met through imports as there is no domestic electronic chip manufacturing at present but the government has approved a Rs 76,000 crore to make in India self reliant in this segment.

"As per the industry estimate, the semiconductor consumption in India was around Rs 1.1 lakh crore in 2020 which is being met through imports due to absence of commercial semiconductor fabs in India," the minister said.

The minister said that beside Rs 76,000 crore semicon programme, the government has also approved modernisation of SemiConductor Laboratory, Mohali as a brownfield Fab.

Domestic Electronic Manufacturing

The Minister said that due to initiatives of the government and efforts of the industry, the domestic production of electronic goods has increased to Rs 5,54,461 crore (USD 74.7 billion) in 2020-21 from Rs 2,43,263 crore (USD 37 billion) in 2015-16 growing at a Compound Annual Growth Rate (CAGR) of 17.9 per cent.

Chandrasekhar also shared that the import of electronic goods increased to Rs 87,169 crore in 2019-20 from Rs 65,779 crore in 2018-19 but reduced to Rs 82,645 crore in 2020-21.

"The export of electronic goods has increased by 25 per cent from 2018-19 to 2019-20 and decreased slightly by 5 per cent from 2019-20 to 2020-21.

"However, in this year, for the corresponding period (April to December), the export of electronic goods has already surpassed the exports of last year (Rs. 55,188 crore) and stands at Rs 81,376 crore," Chandrasekhar said.

"Many policies of the Government including the flagship Production Linked Incentive (PLI) Schemes, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors, Modified Electronics Manufacturing Cluster (EMC 2.0) Scheme are major steps towards making India „AtmaNirbhar‟ in electronics manufacturing" Chandrashekhar added.

Chandrashekhar gave details of the applications received under SPECS scheme until 31st January. "20 applications have been received and approved under SPECS with total project outlay of Rs.6,747 crore and committed incentives of Rs 1,236 crore. The total employment generation potential of the approved applications is 28,845".

SPECS was launched in June 2020 along with PLI for mobile assembly and EMC 2.0

Semiconductor demand in the future

The Union Government, through Ministry of Electronics and IT (MEITY) had recently unveiled a roadmap to achieve $300 billion domestic production of electronics by the year 2026.

Given government's official estimate that $74.7 billion of domestic electronic production requires imports worth $14.5 billion of semiconductors, a $300 billion of domestic electronic production is likely to need upwards of $58 billion semiconductors by 2026.

This estimate is also corroborated by a study conducted by Next Orbit Ventures in association with Frost and Sullivan where the demand of Analog, Memory and Logic chips for India in the 10nm - 180nm process nodes was estimated to be about $51.9 billion by year 2025 . The video below provides further details.

Given that it will easily take 3 or 4 years for semiconductor fabs to be constructed and made equipment ready, it is less likely that India will be able to domestically fabricate much of that semiconductor chips by 2025-26 also, however fast tracking the projects that are ready can potentially lead to reducing the import dependence on semiconductor chips at least by second half of this decade and also trigger interest from more players in the immediate future to establish #FabInIndia units