In recent years, India has seen a significant rise in the import of semiconductor chips. In the fiscal year 2024, the country imported monolithic integrated circuits (ICs) worth an astonishing ₹1.05 lakh crore, marking a 2,000% increase compared to FY16. This surge is largely attributed to the growing demand for chips across various sectors such as consumer electronics, automobiles, medical devices, and industrial automation systems.
Monolithic ICs are crucial components used in the central processing units (CPUs) of computers, smartphones, automobiles, and automation systems. Despite their importance, these chips are primarily imported due to the limited domestic production capabilities in India.
Memory chips, including NAND Flash and DRAM, play a vital role in today's electronic devices. These components are essential for data storage and processing. The import of memory chips surged by 670% in FY24 compared to FY16, underscoring their growing demand.
The import of amplifiers, commonly used in wireless communication and audio equipment, saw a remarkable increase of 4,800% in FY24 compared to FY16. This underscores the expanding range of semiconductor components being imported into the country.
China has been the largest supplier of semiconductor chips to India for the past decade, accounting for nearly one-third of the total imports each year. Other significant suppliers include Hong Kong, Japan, Taiwan, South Korea, and the United States.
To address the heavy reliance on imports, the Indian government launched the Semicon India Programme in 2022. This initiative aims to develop a robust domestic semiconductor and display manufacturing ecosystem. Several manufacturing facilities are underway, including the Tata Semiconductor Assembly and Test Facility in Morigaon, Assam, and the Dholera Semiconductor Fabrication Facility by Tata Electronics in collaboration with Taiwan's Powerchip Semiconductor Manufacturing Corporation.
In FY24, the government allocated ₹3,000 crore to the Semicon India Programme, although only ₹681.1 crore was utilized. For FY25, the budget allocation has been increased to ₹7,000 crore, reflecting the government's commitment to strengthening the domestic semiconductor industry.
While India is making strides in chip design, assembly, testing, and packaging, challenges remain in semiconductor wafer manufacturing. Countries like Taiwan, South Korea, and the United States have established semiconductor fabs, giving them a competitive edge.
India aims to roll out its first domestically manufactured semiconductor chip by 2025. This milestone is part of a broader strategy to reduce import dependency and bolster the country's semiconductor ecosystem.
Domestic production is expected to reduce import dependency, boost the electronics manufacturing sector, create jobs, and enhance national security by securing critical technology.
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