India’s Semiconductor Mission: Why Chips Are the New Oil

Semiconductors are now at the center of the digital economy, powering everything from smartphones and satellites to electric vehicles and defense systems. Like oil in the industrial era, chips are considered the “new oil” of the 21st century.

India has recognized the strategic and economic importance of semiconductors and launched the India Semiconductor Mission to establish itself as a global manufacturing and innovation hub.

What Is India’s Semiconductor Mission?

India’s Semiconductor Mission (ISM) was launched in December 2021 under the Ministry of Electronics and Information Technology (MeitY). It aims to develop a sustainable semiconductor and display ecosystem in India.

Key Features:

• ₹76,000 crore incentive scheme for semiconductor and display fabs.
• Focus on semiconductor design with the Design Linked Incentive (DLI) Scheme.
• Establishment of Centres of Excellence for research and talent development.
• Target to build fabs, ATMP units (Assembly, Testing, Marking, Packaging), and design capabilities.

Why Are Semiconductors Called the “New Oil”?

Semiconductors are vital to nearly all modern technologies, making them as strategically important as oil was in the past century.

Reasons:

• Essential for electronics, AI, 5G, IoT, medical devices, and defense systems.
• A single chip shortage can halt global supply chains, as seen during the COVID-19 pandemic.
• Nations are now securing chip supplies as a matter of national security and economic resilience.

India’s Global Semiconductor Strategy

India aims to reduce its dependence on chip imports and become a key player in the global value chain.

Major Investments:

• Micron Technology: Building an ATMP facility in Gujarat with a ₹22,500 crore investment.
• Foxconn: Initially partnered with Vedanta; now independently exploring fabs.
• Tata Electronics: Planning a major fab in Gujarat.
• ISMC (Israel): Proposed fab project in Karnataka.

International Partnerships:

• Collaboration with the US under the India-US iCET initiative.
• Agreements with Japan, Taiwan, and South Korea for technology transfer.
• Member of the Quad’s semiconductor supply chain partnership.

Key Benefits for India

Economic Growth:

• Reduces the import bill for electronic components.
• Boosts the domestic electronics manufacturing target of $300 billion by 2026.
• Positions India as a hub for global supply chains.

Employment Generation:

• Expected to create over 85,000 direct and 2.5 lakh indirect jobs.

Strategic and Technological Sovereignty:

• Reduces reliance on global supply chains, particularly in defense and telecom.
• Enhances India’s national security posture.

Challenges Facing the Semiconductor Mission

Despite high ambitions, India faces significant hurdles in becoming a semiconductor powerhouse.

Key Challenges:

• High capital investment and long setup time (3–5 years).
• Shortage of skilled professionals in chip design and fabrication.
• Need for stable power, clean water, and advanced logistics infrastructure.
• Intense global competition from established players like Taiwan, China, and South Korea.