Semiconductors are the backbone of microelectronic industry. This industry is expanding very fast and its development is related to new materials and devices. Millions of the scientists all over the world are engaged in the advance research work in the field of semiconductors. In India also several research groups at Universities, Engineering Institutes, Defense Research Laboratories and National Laboratories are actively engaged in developing semiconductors and devices.
India has become the hub for semiconductor design with nearly 2,000 chips being designed per year and more than 20, 000 engineers are working in various aspects of chip design and verification. Today, the semiconductor industry of India represents every aspect of the semiconductor lifecycle, from cutting-edge electronic design automation (EDA) and very large scale integration (VLSI) design companies to an evolving manufacturing eco-system. The ESDM industry of India has grown into a prominent player in the past couple of decades and has been a vital contributor to the nation’s economy. The growth drivers for electronics manufacturing in India are wireless handsets, communications, and information technology (IT) and office automation.
India's electronics design and manufacturing industry is growing faster than the world average for the simple reason of catching up speed with the huge local demand of electronics products. Lot of original equipment manufacturers (OEMs) are going for local manufacturing to serve the local demand as well as other global markets. India’s semiconductor consumption has reached US$ 8 billion in 2012, a 7.4 per cent increase from 2011. It is expected to reach US$ 9.6 billion in 2013, according to a report by Gartner
The electronics systems design and manufacturing (ESDM) sector of India is expected to grow at a compound annual growth rate (CAGR) of 9.9 per cent between 2011 and 2015 to touch US$ 94.2 billion, according to a report by the India Semiconductor Association (ISA) and Frost & Sullivan.
Electronics sales in India are expected to reach US$ 400 billion by 2020. At present, local manufacturing accounts for about 40 per cent of consumption and it could increase to 80 per cent by 2020. Many global OEMs including Samsung, LG, Nokia, Toyota, Hyundai, etc. have set up their manufacturing facilities in India, according to India Semiconductor Association (ISA).
The electronics sector attracted foreign direct investment (FDI) worth Rs 5,466.74 crore (US$ 920.20 million) during April 2000 to March 2013, according to the data released by the Department of Industrial Policy and Promotion (DIPP), Government of India.
Some of the major investments in Indian semiconductor industry include:
The Government of India has initiated several initiatives for the development of electronics sector in the country. It has recently approved National Policy on Electronics (NPE). The main objective of the policy is to achieve revenue of about US$ 400 billion by 2020 with an investment worth US$ 100 billion and employment to around 28 million by 2020. The NPE aims at achieving a turnover of US$ 55 billion of chip design and embedded software industry, US$ 80 billion of exports in the sector. The Government of India also plans to set up over 200 electronic manufacturing clusters.
Some of the initiatives taken by the Government for boosting the semiconductor industry of India are:
Huge manufacturing infrastructure is coming up in many states in the form of clusters. The Government of India is actively involved in training and funding talents in electronics and semiconductor industry.
India continues to be an emerging market both for low cost electronics devices and high-end expensive gadgets. Multi-national companies (MNCs) are investing more and more in India by expanding or opening new offices on back of the initiatives taken by the Government.
India has a competitive advantage over other countries because of its large engineering skill pool. It offers a large pool of a technically and scientifically-skilled English-speaking workforce. At the same time, the country has ample semiconductor design talent at competitive costs.
The future on the Indian semiconductor design companies will arise with the emergence of fabless design companies from India. These companies would be focusing on creating products for the Indian market. India can take the lead in electronic systems design and electronic product manufacturing. The absence of systems or a legacy creates for India, the unique opportunity to leapfrog technology.
Exchange Rate Used: INR 1 = US$ 0.0168 as on June 28, 2012
References:Media reports, India Semiconductor Association, Ministry of Information Technology, Press Releases