The Semicon India Programme, launched in 2021, aims to develop the semiconductor and display manufacturing ecosystem.
| Photo Credit: FLORENCE LO
At the World Economic Forum in January, Minister of Electronics and Information Technology Ashwini Vaishnaw announced that India’s first domestically manufactured semiconductor chip will be rolled out this year. Through domestic production, India aims to reduce its increasing import dependency.
Five manufacturing facilities are under construction for the manufacturing and assembly of semiconductor chips, backed by the Semicon India Programme. These include the Tata Semiconductor Assembly and Test facility in Morigaon and the Dholera semiconductor fabrication facility (fab) by Tata Electronics in collaboration with the Taiwan-based Powerchip Semiconductor Manufacturing Corporation.
The Semicon India Programme, launched in 2021, aims to develop the semiconductor and display manufacturing ecosystem. However, the actual spending on the four schemes listed under the Semicon India Programme has consistently fallen short of budgeted allocations. In FY23, expenditure was ₹13 crore, significantly lower than the revised estimate (RE) of ₹200 crore that year. In FY24, the budgeted ₹3,000 crore was revised to ₹1,503.36 crore, with only ₹681.11 crore ultimately spent.
In FY25, the RE of ₹3,816 crore was nearly half of the originally budgeted ₹6,903 crore (Chart 1). However, the good news is that the RE for FY25 has doubled compared to FY24, suggesting that the government is making efforts to improve the programme’s implementation.
Chart 1 | The chart shows the Union Budget allocation for the Semicon India Programme (in ₹ crore)
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This is important to note in light of India’s increased import reliance for semiconductor chips. Data from the Ministry of Commerce and Industry show that in the past 10 years, imports for semiconductor chips such as monolithic integrated circuits (ICs), memories, amplifiers, and other ICs have increased significantly.
Monolithic ICs are used in the CPUs of computers and smartphones, automobiles, medical devices and industrial automation systems and are imported the most. In FY24, the total value of Monolithic IC imports was ₹1.05 lakh crore (Chart 2), a 2,000% increase compared with FY16.
Chart 2 | The chart shows the value of import of semiconductor chips in India (in ₹ lakh crore)
Memories refer to memory chips, which include non-volatile memory chips (such as NAND flash used in Solid State Drives and pen drives) that retain data permanently and volatile memory chips (such as RAM) that store data temporarily. In FY24, import of memory chips increased by 4,500% compared with FY16. Imports of amplifiers, which are utilised in wireless communication and audio equipment, increased by 4,800% in FY24 from FY16.
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Even as a percentage share of total imports, the share of semiconductor chips has increased over the years. Monolithic ICs constitute nearly 2.09% of India’s total imports in FY25 (April-November), a considerable jump from 0.19% in FY16 (Chart 3). The share of memory chips in total imports has also increased significantly.
Chart 3 | The chart shows the share of semiconductor chips in India’s total imports. Figures in %
In the past 10 years, except FY19, China has been the major supplier of semiconductor chips to India, accounting for nearly one-third of the import value every year (Chart 4). Hong Kong, Japan, South Korea, Singapore, and Taiwan have also been major suppliers to India.
Chart 4 | Year-wise share of import value of chips. Figures in %
With the new facilities, India will be able to add value in the assembly, testing, and packaging, and fab segments of the global value chain for semiconductors, but it is yet to make major strides in EDA (software used for designing chips), Core IP (patents), wafers (semiconductor materials), fab tools and ATP tools (machinery), and design of chips.
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Published – March 13, 2025 07:00 am IST
