For still greater ambition on silicon

The government has done well to approve a Rs 76,000-crore incentive scheme for semiconductors. Developing capability in semiconductor design and manufacturing is a vital strategic necessity for India, not a commercial operation alone, for a country that aspires to strategic autonomy. Advanced microchips underpin defence: missile systems, satellites and communications. India cannot be in a position in which a foreign power can snoop on or control, through some backdoor installed in these complex bundles of software and microscopic hardware, such systems, or be scrounging for parts at a crucial moment. It makes sense for India to develop a semiconductor manufacturing industry that makes machines that are used to produce chips and an industry that designs logic chips, memory chips and systems on a chip (SoC), and fabricates them in India as well.

The plan is to provide fiscal support of up to 50% of the project cost for setting up semiconductor and display fabrication units. The support is for those who have the technology. That would rule out any Indian entity. The point is to fund creation of the knowhow and capacity, not just lure foreign companies to set up shop here. The notion that India must focus on medium- and low-end chips is flawed, not just because the demand for advanced silicon would go up as all businesses go digital and artificial intelligence (AI), augmented reality (AR) and virtual reality (VR) combine in routine business, but also because low-to-medium levels of sophistication would not do for strategic autonomy. The need is to build competitive advantage in high-end semiconductors and chip design.

Various kinds of microchips form a large part of India's imports and can surpass oil as the single largest item. The machines needed to supply the components of a chip fab are very sophisticated and produced by one or two companies. Backward integration would call for their development as well. This is not just paranoia. India has the talent pool and the capital required. Why would we not leverage them to be a supplier to the world?