The Semiconductor Race: Here’s A Wish-List For The Prime Minister To Boost Chip Manufacturing

On the same day that I was on India's public broadcast television channel Doordarshan News as a panelist in a discussion on mobile phone manufacturing in India in the context of #AtmaNirbharBharat Abhiyan, came this detailed article about how China is taking measures to speed up chip manufacturing on its "mainland".

I had ended my previous article in Swarajya mentioning multiple countries with which India has a friendly relationship and whose fabs (fabrication industry) could play a vital role in kick-starting the much-needed semiconductor fab initiatives in India.

However, it will be foolish on India's part to just sit and assume that things will happen on its own.

There are a few things that Prime Minister Narendra Modi can or may be should do, and the earlier the better.

It is important that it comes from the Prime Minister himself because the subject of semiconductor fabs needs or impacts multiple areas — defence, commerce, power, water to name a few and electronics — permeates almost everything including equipment in the health sector.

Moreover, states need to be brought on board, educated about what is there in it for them and so on.

Remember, two important portfolios — space and atomic energy — are directly under the Prime Minister. Semiconductor manufacturing efforts, while the policies for which can remain under Ministry of Electronics and Information Technology, need some hand-holding from the Prime Minister. In the hope that the Prime Minister may indeed read this article, I will keep this article short and also use some mnemonics given his fondness for them.

Here is a wish-list to the Prime Minister, in our efforts to boost semiconductor chip (IC) manufacturing in India.

1) Declare: the Prime Minister should declare India's strong intent towards #FabInIndia — may be in his 28-June Mann Ki Baat, or in one of his addresses to the nation or in the least, tweet with that hashtag. He could mention the SPECS and EMC2 schemes, but hopefully the messaging will be clear that his government will not leave it at just announcing schemes, but will see it to fruition. I have already written in previous articles why it need not be <28nm technology node or ultra-advanced to begin with, but India needs to get going, and get going soon.

2) Dedicate: keeping the politics of it apart, there are lessons to be learned from the Sam Pitroda story viz-a-viz C-DOT . It can be debated whether a body itself has to be set up or if it can be one technocrat with good semiconductor and fab domain knowledge working out of Prime Minister’s Office and dedicated to the cause of seeing commercial fabs take off in India.

Indeed, it should not end up that the body or the technocrat becomes yet another policy making initiative or a hurdle by any means — it or he/she should have an agenda and attitude of help rather than hinder, to coordinate rather than confuse, to focus rather than falter.

3) Develop: that technocrat or the body should oversee and expedite the process with clear target dates and goals. Not limited to it, but first up is what I refer to as friendly publicity initiatives (FPI).

Confidence-building measures must be undertaken to take the message to possible Indian investors, and more so for potential non-Indian investors. In other words FPI is a must before we can see foreign direct investment (FDI) — it may be true for all sectors, but it is more critical in India's efforts to open semiconductor fabs.

Who better than Prime Minister Modi to help develop this publicity — if as the Chief Minister of Gujarat, he could do a Suswagatam SMS, I hope as the Prime Minister he will do more and to many.

Tailpiece: there is a 17 April 2020 article hinting at the possibility of an even bigger quantum of incentives — 50 per cent ‘pay-up’ by the government and another up to 25 per cent as loan.

It is not clear if that is what eventually came out as the 2 June announcement of SPECS (25 per cent reimbursement on Capex) and EMC2 (50 per cent reimbursement on land, 75 per cent if it is a CFC) or if there is yet another policy in the making.

If it is the latter, then the government should finalise and announce it at the earliest.

If such a new scheme or policy or announcement is not in the making, then also the government should immediately clear the air lest investors wait for it and ignore what is already offered in SPECS/EMC2 . In fact, this too goes back to the second point mentioned above.

In corporates, a single point of contact, who is not spread too thin is often assigned for key projects, and the existence of such a person (or the spokesperson for a body) could help give the much needed clarity in such situations.