Pax Silica: India’s Quest for Semiconductor Sovereignty

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India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India? Mention the salient features of the India Semiconductor Mission.
                                                                             -2025 (GS-3 Science & Technology)

Context

India officially launched its first indigenously designed 1.0 GHz, 64-bit dual-core microprocessor DHRUV64 Microprocessor developed by C-DAC under the Microprocessor Development Programme (MDP), it is based on the open-source RISC-V architecture.

Significance of the Industry

1. Economic Significance: The “Multiplier” Effect

• Engine of Digital Economy: Semiconductors power the $1 trillion digital economy goal. They are the core components of the electronics manufacturing sector, which is projected to reach $300 billion by 2026.
• Employment Generation: The industry is a massive job creator. Beyond high-end design engineers, the setting up of Fabs and OSAT units (Assembly & Testing) creates a huge demand for “gray-collar” technicians.
  • Context: India is projected to require 3 lakh semiconductor professionals by 2027.
• Correcting Trade Imbalances: Currently, India imports nearly 100% of its chips, with a massive bill estimated to hit $100 billion by 2025-26. Domestic production is vital to reduce this foreign exchange outflow.

2. Strategic and National Security Significance

• Technological Sovereignty: In an era of “Cyber Warfare,” hardware-level security is paramount. Using indigenous chips like the DHRUV64 or Vikram-3201 ensures that critical infrastructure (Power grids, Telecom, Defense) is free from foreign “backdoors” or kill-switches.
• Trusted Supply Chains: The “China Plus One” strategy and the recent Pax Silica initiative highlight the shift toward “friend-shoring.” India is positioning itself as a Trusted Value Chain Partner for the West, reducing reliance on geographically concentrated hubs like Taiwan.
• Defense & Space: Modern warfare relies on “Smart” munitions, UAVs, and satellite communication—all of which require specialized, radiation-hardened, and high-performance semiconductors.

3. Technological & Industrial Growth

• Foundation for Industry 4.0: Technologies like AI, 6G, Internet of Things (IoT), and Quantum Computing are physically impossible without advanced semiconductor nodes.
• Clean Energy & EVs: Semiconductors are the “brain” of Electric Vehicles (managing battery systems) and Solar Inverters. India’s Net Zero 2070 goal is directly tied to a stable chip supply for the green energy transition.
• The RISC-V Revolution: By adopting open-source architectures (like in the DHRUV64), India is breaking the monopoly of global giants (Intel/ARM), allowing domestic startups to innovate without heavy licensing fees.

India’s Current Position

In 2025, India’s position in the semiconductor industry has shifted from being a “Design Back-office” to an “Emerging Manufacturing Hub.”

1. The Numbers: Market and Scale

• Market Size: Valued at $45–50 billion in 2024-25, it is one of the fastest-growing markets globally, projected to hit $110 billion by 2030.
• Global Talent Share: India contributes 20% of the world’s chip design talent. Over 125,000 Indian engineers are currently working on global “tape-outs” (final designs) for companies like Intel, NVIDIA, and Qualcomm.
• Consumption: India accounts for nearly 10% of real global semiconductor consumption, largely driven by the mobile, automotive, and industrial sectors.

2. The Manufacturing Landscape (ISM 1.0)

As of late 2025, the India Semiconductor Mission (ISM) has grounded 10 major projects with a cumulative investment of ₹1.6 lakh crore.

a. Mega Fabs- Tata-PSMC (Dholera, Gujarat): ₹91,000 Cr plant.

b. Packaging (OSAT/ATMP)- Tata-PSMC (Dholera, Gujarat): ₹91,000 Cr plant.

c. Packaging (OSAT/ATMP)- Micron (Sanand); Tata (Assam); CG Semi (Gujarat).

d. Indigenous Processors- DHRUV64 (C-DAC); Shakti (IIT-Madras).

e. New Frontiers- HCL-Foxconn JV (UP); 3D Glass Solutions (Odisha).

3. Technological Standing

• From 28nm to 3nm: While manufacturing is currently focused on 28nm to 90nm nodes (perfect for EVs and 5G), India inaugurated its first 3-nanometer (3nm) design centers in Noida and Bengaluru in May 2025.
• Compound Semiconductors: India is making a strategic shift into Silicon Carbide (SiC) and Gallium Nitride (GaN), which are essential for high-efficiency power electronics in Electric Vehicles.

4. Strategic Position: “The Trusted Partner”

India is leveraging the Pax Silica (a period of semiconductor-driven peace/alliance) to position itself as a reliable alternative to China.

• Global Alliances: India has signed critical MoUs with the USA (iCET), Japan, Singapore, and the EU to build a resilient, non-China-centric supply chain.
• Sovereignty: By developing the RISC-V (DHRUV) architecture, India is reducing its reliance on proprietary foreign IP (like ARM or Intel), ensuring “Hardware Sovereignty.”

5. Summary of India’s Current Tier

India currently sits in the “High Design, Emerging Fab” tier. We are the world’s leading “Brain-shop” for chips and are on track to become one of the Top 5 Global Manufacturing Destinations by 2030.

Challenges

1. Capital Intensity and Long Gestation Periods

Semiconductor fabrication is one of the most expensive industries globally. A single state-of-the-art “Mega Fab” can cost between $10 billion and $20 billion.

• The Fiscal Burden: Despite the ₹76,000 crore allocation under ISM 1.0, the government must sustain high subsidies (up to 50% of project costs) over decades, not just years.
• Economic Risk: These plants have long gestation periods (3–5 years) and are subject to the industry’s notorious cyclicality (periods of “chip gluts” followed by “chip shortages”).

2. Critical Infrastructure: The “Zero-Error” Requirement

Fabs require a level of infrastructure reliability that is unprecedented in India:

• Uninterrupted Power: A power fluctuation lasting even a few milliseconds can ruin an entire batch of thousands of wafers, costing millions of dollars. As of 2025, ensuring “Gold Standard” power stability at sites like Dholera remains a top engineering challenge.
• Ultra-Pure Water (UPW): A single large fab can consume 5–10 million gallons of water daily. This water must be thousands of times purer than drinking water (UPW acts as an industrial solvent). In water-stressed regions like Gujarat, sourcing and recycling this volume is a significant ecological and logistical task.

3. The Talent Gap: Moving Beyond Design

While India has 20% of the world’s chip design engineers, it lacks fabrication specialists.

• The Numbers: Projections for 2027 indicate a shortfall of 250,000 to 350,000 skilled workers across the value chain, specifically in process engineering and cleanroom operations.
• “Brain Drain” 2.0: High-end Indian talent often migrates to established hubs like Taiwan (TSMC) or the USA (Intel) due to better research ecosystems and pay.

4. Supply Chain and Raw Material Vulnerability

India currently lacks the “upstream” ecosystem of chemicals, gases, and minerals.

• Critical Minerals: India is heavily dependent on imports for Silicon wafers, High-purity Neon, Gallium, and Germanium. Geopolitical tensions (e.g., Russia-Ukraine for Neon, China for Gallium) make the supply chain fragile.
• Specialty Chemicals: The industry requires roughly 500 different specialty chemicals and gases, most of which are currently not manufactured to “semiconductor grade” in India.

5. Environmental and Sustainability Concerns

The “clean” image of microchips hides a “dirty” manufacturing process:

• Hazardous Waste: Fabrication involves toxic materials like arsenic, antimony, and phosphorus. Managing the disposal of these hazardous effluents without damaging local groundwater is a major regulatory challenge.
• Carbon Footprint: Fabs are “power-hungry” (consuming as much electricity as a small city). Aligning this with India’s Net Zero 2070 goals requires a rapid shift to renewable baseload power, such as Small Modular Reactors (SMRs) or dedicated solar-wind hybrid plants.

Government Initiatives

The Government of India has adopted a “Plug-and-Play” policy approach to create a globally competitive semiconductor ecosystem. By 2025, the focus has shifted from merely attracting investment (ISM 1.0) to building a sustainable, end-to-end supply chain (ISM 2.0).

1. India Semiconductor Mission (ISM 2.0)

Following the success of the initial ₹76,000 crore outlay, the government recently expanded the mission with a new $15–20 billion (approx. ₹1.3–1.7 lakh crore) phase.

Expanded Scope: Unlike the first phase which focused on large fabs, ISM 2.0 includes incentives for raw material suppliers, specialty chemical manufacturers, and capital equipment makers.

Modernization of SCL Mohali: A dedicated investment of ₹4,500 crore has been cleared to transform the government-run Semiconductor Laboratory into a high-volume R&D and commercial production center, ensuring it remains a public strategic asset.

2. Fiscal & Production Incentives

Modified Semicon India Programme: The government provides 50% fiscal support on a pari-passu (equal footing) basis for setting up Silicon Fabs, Display Fabs, and ATMP/OSAT facilities.

Design Linked Incentive (DLI) Scheme: To foster domestic Intellectual Property (IP), this scheme offers up to ₹15 crore per application and deployment-linked incentives of 4% to 6% on net sales for five years.

Recent Update: As of late 2025, over 23 chip design startups have been approved, including those working on AI chips and 5G IoT modules.

Electronics Component Manufacturing Scheme (ECMS): Launched in early 2025 with a budget of ₹22,919 crore, it aims to increase domestic value addition from 5% to 20% by incentivizing the production of sub-components like resistors and multi-layer PCBs.

3. Talent and Skilling: “Chips to Startup” (C2S)

To address the workforce challenge, the government is implementing a multi-tiered skilling strategy:

Academic Integration: Providing industry-grade Electronic Design Automation (EDA) tools to nearly 400 universities across India.

Global Partnerships: Collaborations with firms like Lam Research aim to train 60,000 engineers in nanofabrication and process engineering over the next decade.

4. Strategic Infrastructure: The IndiaAI Mission

The ₹10,372 crore IndiaAI Mission complements the semiconductor push by creating a massive demand for high-performance computing.

It aims to establish a computing capacity of over 10,000 GPUs (Graphics Processing Units), which will eventually be powered by indigenous 64-bit processors like DHRUV.

Way Forward

1. Move Up the Value Chain: India should transition from mature nodes (28nm) to leading-edge nodes (3nm/2nm). The recent inauguration of 3nm design centers in 2025 is a step in the right direction, but this must be coupled with high-end fabrication capabilities to support AI and Supercomputing.
2. Strengthen the “Upstream” Ecosystem: Focus must shift toward the Materials and Equipment pillars. Incentivizing the domestic production of semiconductor-grade chemicals, specialty gases (like Neon and Helium), and silicon wafers will reduce the “Import Dependency Trap.”
3. Infrastructure “Gold Standard”: Developing dedicated Semiconductor Clusters with plug-and-play infrastructure is vital. This includes guaranteed 99.99% power stability and massive-scale Water Treatment Plants (WTP) to provide the Ultra-Pure Water (UPW) required for zero-defect manufacturing.
4. Deep-Tech Research & IP Creation: Rather than just being a “Foundry” for others, India must own the Intellectual Property. Doubling down on the RISC-V (DIR-V) program will allow Indian startups to create customized chips for local needs in EVs, Agriculture (IoT), and Strategic Defense without paying heavy foreign royalties.
5. Global Supply Chain Diplomacy: Leveraging the “China Plus One” sentiment, India should deepen partnerships with Quad nations and Singapore. Establishing a “Common Component Pool” or a “Mineral Bank” with friendly nations can safeguard against global supply shocks.

Conclusion

India’s semiconductor journey is no longer just about meeting domestic demand; it is about becoming a “Trusted Partner” in the global value chain.

“Oil was the black gold of the last century, but chips are the digital diamonds of the 21st century.²² The day is not far when the world will say – Designed in India, Made in India, Trusted by the World.” — PM Narendra Modi