ISM 2.0: Several chip companies plan to invest in India in 6 months, says Ashwini Vaishnaw

The government has so far committed close to $23.5 billion under the two phases of the India Semiconductor Mission with 12 approved projects, including a chip fab by the Tata Group and five chip assembly units that have already begun production.

It’s expecting the next set of companies to start investments in six months, Ashwini Vaishnaw, Union minister for electronics and IT, told Surabhi Agarwal. Vaishnaw, who’s completed five years as IT minister, said that AI companies have a “much bigger responsibility” to ensure their products are “safe” and India is holding consultations on the issue.

The 5th Semicon India summit has just concluded. You have said there’s around $12 billion worth of interest. When can we expect them?


ISM 2.0 is built on six pillars: design; materials and machines; more fabs; more ATMP (assembly, testing, marking, and packaging) and OSAT (outsourced semiconductor assembly and test) units; R&D; and talent. Many companies have already started discussing with us. Some CEOs who met me are planning to start their investments in the next six months. It’s that kind of confidence that industry has in India now.

There’s a big debate in the US about slowing or pacing AI. What’s your view?

Whenever any disruptive technology has come into the world — whether automobiles or the nuclear industry — governments and parliaments have stepped in to have the right kind of regulation. We certainly have to work in a techno-legal framework. It cannot be just a law that solves this problem. It has to be a technical (by the companies) as well as a legal solution.

So are you saying AI model developers have a greater responsibility?

They have a much bigger responsibility. If you are creating something, then you might as well see that it is safe. What’s happening with AI is that the development pace is very rapid, extremely rapid. Whatever we thought a quarter ago is irrelevant today. That rapid pace brings risks with it, and the industry is cognisant of those risks. Some of the incidents that have happened recently are alarming. What are the liabilities of agents? Who is liable if an agent does something very serious, such as breaking down a grid or pushing a student towards suicide? Or allowing or forcing a car to suddenly brake in the middle of traffic? Those questions have to be answered. The industry has to answer them and take the lead because, unlike physical technology, where it is easier to find what to regulate and what to check, that kind of measurement in AI is very difficult. The designers and builders of those models know where the issues are. They have to be on board in the regulatory journey.

There’s already $11-12b of interest in ISM 2.0. While govt has committed around $23-24b, other countries are committing much larger sums. What does India offer that’s attracting firms?

Your point is right. Many of these countries are pouring in hundreds of billions of dollars. In our country, there are competing demands on capital. We cannot afford to put that much investment into the semiconductor industry because there are competing investments in agriculture, education, healthcare and everywhere else. What we offer as a differentiating factor is design capability. From day one, when we designed this programme, we said we would build upon this strength. That’s why we gave the latest semiconductor design tools, EDA (electronic design automation) tools, to institutions and universities. (In the second phase), it will be important to make sure the design ecosystem comes up because the next generation should see a Qualcomm or an Intel coming out of India. In pillar two, if we get three large equipment manufacturers and three large materials manufacturers setting up in India, it would be a good success. For fabs, we will focus on niche products. These will give us the capability to bring value to the global semiconductor industry. In advanced packaging, much of the value and increase in capacity and compute capability will come through advanced packaging as Moore’s law gets phased out. There are companies that would like to set up equipment design and manufacturing. They are already talking to precision manufacturing companies. Precision manufacturing is a horizontal that serves multiple industries —aeronautical, space, defence, electronics and semiconductors. The demand from semiconductors will help develop that horizontal, which will also benefit defence, space and aeronautical manufacturing.

What is our progress on the AI law?

We have had multiple discussions with AI developers, the development community, academia and global Big Tech companies on this topic. A consensus is building that innovation is very important, but here the risks outweigh the challenges that we see. They outweigh the positive outcomes which might come from AI. Regulation has to be framed looking at that. But again, it has to be a technolegal approach. The companies developing the models have to take a much bigger share of the responsibility. Just passing a law will not help. Safeguards and guardrails have to be built by companies within the models themselves.

Can India take a lead in building greater cooperation between governments on AI?

India has, throughout the AI summit and after that, taken this conversation forward with many countries. I think something similar to the nuclear kind of thing will have to happen in the AI world, where countries come together and reach a consensus that humanity comes first, it has to be safe, and AI has to bring value to the world rather than becoming a threat.

On social media harms and child safety, how can platforms have greater responsibility?

Child safety is paramount for us. It’s the next generation that has to have the benefit of technology, but should not get the harms coming from addictiveness, from the way algorithms target young citizens and make them addicted or hooked onto mobile phones or social media platforms, and from the kind of content young people see. That is something every society in the world is grappling with. Many models have already emerged, and a consensus is building around that. The time has come in our country also to have that framework where child safety, women’s safety and online safety of our citizens are balanced with the benefits that come from technology.

On mobile manufacturing, the government has approved the new scheme. When will we see a made-in-India device rather than a merely assembled-in-India smartphone?

When we started the mobile phone programme in phase one, the focus was on getting volume. The nature of the mobile phone industry is that volume is most important. If you have volume, demand for components starts coming up.

In phase one, we focused on getting the volume in India, and that has been a good success story because now we are the world's second-largest mobile phone manufacturer. Mobile phones have become the top exported commodity out of India. Electronics manufacturing has moved from ninth to third rank in the export table.

Based on that volume growth, we decided to work on electronics component manufacturing. Once we have the volume and bring component manufacturing, those components can be used in the final finished product. Now we are moving more towards materials manufacturing and the capital equipment that goes into manufacturing mobile phones.

That brings the entire ecosystem of mobile phone manufacturing to our country.

Where are we vis-à-vis China in manufacturing and value addition?

China has had a journey of three and a half to four decades, while our journey is just about a decade or a bit less. The two countries are running different races. Our race is different from China's.

What we are seeking as the most important factor is the employment that the mobile phone and electronics manufacturing industries are creating. Electronics manufacturing has already created 25 lakh jobs in our country, and many more are coming as the industry matures and expands beyond the finished product. For us, that employment factor is a much bigger factor.

I'll come to the value addition numbers. China has reached about 30-35% and in less than a decade, we have been able to reach about 26-30% value add.

If you had to give one message to investors looking at India for semiconductor investments, what would it be?

Consistency. We are consistent in our thoughts, we are consistent in our policy, and we are consistent in our efforts.

The Prime Minister has said the supply chain is getting weaponised and India's success in semiconductors would be good for the world. By when do you think India will establish itself as a strong contender in an ecosystem that has existed for decades in Taiwan and South Korea, and is developing in China and the US?

It's a long journey and it's going to be a difficult path. It will take persistence, perseverance, methodical planning and laser-sharp focus on execution.

By the end of Semicon 2.0, we should have a significant part of the ecosystem well established in our country. We'll have many more units producing, design companies designing and a very good talent pool. We'll also get resilience in the supply chain.

People used to question why we chose 28 nanometres. It was a very well-thought-through decision. More than 70% of semiconductor chip volume is 28 to 90 nanometres, and these chips go into practically everything we manufacture—refrigerators, televisions, scooters, bikes, cars, trains, missiles and drones.

That's a very important segment where many older fabs are shutting down and geopolitical concentration is building up. By choosing 28 to 90 nanometres for the first fab, we positioned India as an alternative to concentrated supply chains and gave countries an option for resilient chip manufacturing. That has given us very good results.

When you launched ISM 1.0, did you expect it to reach a point within four years where India would have 12 approved projects, a fab under production and five OSAT facilities, with chips already being commercially produced?

When we started this journey, we were cognisant of the difficulties because semiconductors are a very complex industry, with a very steep learning curve. We prepared very well for it and were candid and humble in our approach.

When I met about 65 CEOs in 2023, I went to the factories. My 30-second pitch was: “We don't know how to make semiconductors. Teach us.” We meticulously prepared the list of around 500 chemicals and gases that go into chip manufacturing, contacted each one and invited them to come to India, look at the country, the economy and the growth happening here.

That entire hard work took us from a situation where people questioned whether India would ever be able to produce chips to a level where there is now a lot of confidence in the country's capabilities.

The Prime Minister gave us very clear guidance. He said, don't take shortcuts, even if it takes two more years, make sure the foundation is laid well. Second, don't look at a three- or four-year horizon, look at a 20-year horizon. Third, don't just look at one fab or one factory, look at the entire ecosystem.

That guided us throughout this journey and helped us evolve from Semicon 1.0, which was about laying the foundation, to building the industry around six pillars.