India to consume semiconductors of $80 billion to meet the target of $300 billion domestic electronic production

The Minister of State for Electronics and IT Rajeev Chandrasekhar revealed that India will consume semiconductors of about $70-80 billion to manufacture electronics products worth $300 billion by 2026. According to the minister, government will achieve the target of establishing a semiconductor ecosystem in the country.

The minister was speaking on the eve of announcing the first conference on setting up the semiconductor ecosystem in the country — Semicon India 2022.

He said, “Demand for digital devices and electronics products is only going up. If you have seen our electronics vision document, we have announced a target of $300 billion in electronic manufacturing, with $120 billion in exports. Our consumption, based on $300 billion electronics (production target by 2026), will be almost $70-80 billion of semiconductors,” as reported by PTI.

Under the Semicon India Programme, the government has received proposals from five companies to set up the electronic chip and display manufacturing plants with an investment of Rs 1.53 lakh crore. As per report, Vedanta Foxconn JV, IGSS Ventures and ISMC have proposed to set up electronic chip manufacturing plants with USD 13.6 billion investment and have sought the support of USD 5.6 billion from the Centre under the Rs 76,000 crore Semicon India Programme. Vedanta and Elest have proposed to set up display manufacturing units — used in mobile phones, laptops etc — with a projected investment of $6.7 billion.

“Well by industry benchmarks its a fair estimate. However, with present supply chain issues at the global level, the big challenge would be, will we be able to procure semiconductors worth $80 bn. Otherwise the number isn’t aggressive I would say for a market like India which is also now exporting with PLI scheme giving it an impetus,” Faisal Kawoosa, founder and chief analyst of market research firm Techarc, told BGR.in.

Earlier, Indian conglomerate Vedanta has announced that it has partnered with Hon Hai Technology Group also known as Foxconn to form a joint venture to manufacture semiconductors in India.

“India’s digital economy is on a upward growth curve. Driven by the pandemic, many new digital consumers from Aspirational India have come online. As a consequence, India’s digital economy, especially in a 5G-led era, would see an heightened demand for electronics,” Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR noted.

According to the MoU (memorandum of understanding) signed between the two companies, Vedanta will hold the majority share in the joint venture and Vedanta Chairman Anil Agarwal will be the chairman of the new company. Times of India reports that Foxconn will hold a 40% stake in the joint venture while Vendata will hold a 60% stake. Together the two companies will invest to manufacture semiconductors in India. “It will provide a significant boost to domestic manufacturing of electronics in India. Discussions are currently ongoing with a few State Governments to finalise the location of the plant,” Vendata and Foxconn said in a joint statement.

“This will be the first joint venture in the electronics manufacturing space after the announcement of the policy,” the two companies added. This is also the second attempt of Vedanta to enter the semiconductor market in India. The company had tried to set up a chip and glass manufacturing ecosystem in India by making an investment of about Rs 60,000 crore. However, the project failed to take off.

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Conclusion

Rajeev Chandrasekhar said India will need semiconductors worth $70-80 billion to manufacture electronics products worth $300 billion by 2026. The government has received proposals from five companies to set up the electronic chip and display manufacturing plants with an investment of Rs 1.53 lakh crore