Indian govt approves proposal for setting up two semiconductor fab units


Friday, September 13, 2013: The Government of India has given a nod to the proposal for setting up of two semiconductor manufacturing units in the country. This will help in reducing the import of electronics products in the country. Reliable sources from Department of Electronics and Information Technology have confirmed the news saying that the cabinet has approved the proposal of the Telecom Ministry for setting up two semiconductor wafer fabrication manufacturing facilities in India.

Commenting on the decision, Dr Ajay Kumar, joint secretary, DeitY, said, “This is a historic decision and will change the landscape of electronics in the country.”

It is worth mentioning here that some of the world’s leading economies including the USA, France, Germany, Ireland, Japan, Singapore, Taiwan and China besides a number of developing economies like Malaysia and Israel have their own fabs. These fabs continue to contribute significantly to the growth and development of the economy of their respective countries and it is hoped that this would be the case in India as well. As of now, India has no choice but to depend on the imports of electronics products, mainly chips. But these fabs will be helpful in checking the imports of electronics, which may exceed oil imports by 2018.

Setting up of these fabs will require an investment of around Rs 250,000 million. These fabs will boost R&D and innovation in the field of electronics, which will eventually help in generating 30 million jobs (both direct and indirect) in the country by 2020.


The Government of India had sent proposals to establish fabs in the country nearly two and a half years ago. An empowered committee received as many as 30 application, out of which two fab projects were short-listed. The committee includes Sam Pitroda, adviser to the Prime Minister, and V Krishnamurthy, chairman of the National Manufacturing Competitiveness Council, and few others. Jaypee Group is spearheading one of the two project consortium. It has IBM as its technology partner, whereas the other project is led by Hindustan Semiconductor Manufacturing Corporation. Its technology partner is Geneva-based STMicroelectronics.

Welcoming the decision, the India Electronics & Semiconductor Association (IESA) lauded the Government of India’s notification of the Semiconductor Wafer Fab (fab). The IESA deems the fab a highly strategic game changer for India, welcoming the fructification of the proposal. The IESA looks at the fab as India building strategic technology capability which will leapfrog the country ahead by several years, in development of indigenous electronic products and tremendously aid in the development of a local fabless semiconductor industry. IESA also believes that the presence of a local fab in India would boost the country’s capability to build IP assets within India. We reiterate that in terms of its impact and implications, the fab must be treated on par with India’s investments in its space and nuclear programmes.

The commencement of building the fab comes at a time when the Indian economy is at a point of inflection. It will arrest project costs from further escalation and will give the Indian ESDM ecosystem a boost to take their place as a leader in the global economy.

India, today consumes close to US$ 7 billion of semiconductor products every year. By 2020, when the total ESDM market is expected to reach US$ 400 billion, this consumption is expected to rise to touch US$ 55 billion. With the location of a fab in India, the country could achieve a degree of self-sufficiency in electronics, and partially reduce the very high supply chain risks that India is exposed to, without an alternate source for procurement.

Watch out this space for details of the notification and industry’s reaction.



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