October 21, 2011 | Pradeep Chakraborty
The Department of IT, Government of India, recently organized a workshop on electronics system design and manufacturing (ESDM), conducted by the India Semiconductor Association (ISA). Dr. Ajay Kumar, joint secretary, Dept. of IT, Government of India, touched upon some major initiatives to promote ESDM. These include:
* Setting up two semiconductor wafer fabs for manufacture of chips.
* Introducing Modified Special Incentive Package Scheme to encourage manufacture of high-priority electronic products in India.
* Provide incentives for setting up of electronics manufacturing clusters.
* Setting up of the National Electronics Mission (NEM).
* Providing Preferential Market Access to domestically manufactured electronics products for government procurement and procurement by government licensees.
* Setting up of “Electronic Development Fund”.
Some of the other initiatives to promote ESDM include:
* Draft National Policy for Electronics, 2011 released for public consultation on October 3, 2011. Comments invited till end October.
* Additional items included under ESDM for benefit of Special Focus Scheme under the Foreign Trade Policy recently.
* Mandating health and safety standards for 16 major electronic items under finalization in consultation with BIS.
* Private sector participation in human resource development being promoted.
* Sector specific initiatives for set-top boxes, medical electronics, avionics, industrial electronics, automotive electronics, LEDs, strategic electronics for defense, space and nuclear.
* Awareness creation and interest generation domestically and globally.
* Renaming the Department as Department of Electronics and IT (DeitY).
The semiconductor design industry in India consists of VLSI design, board/hardware design and embedded software development. The size was estimated at $6.5 billion in 2009 and is expected to log a CAGR of 17.3 percent over the next three years to reach $10.6 billion in 2012. Nearly 2,000 chips are being designed each year and more than 20,000 engineers being engaged in various aspects of chip designing and verification.
India is emerging as a semiconductor chip design destination. Among the top 10 countries by estimated jobs in R%D (2009), India leads the pack, with 12,120 jobs, well ahead of the USA at 7,290 jobs and China 4,000 jobs. Also, Indian institutes are focusing their research across the semiconductor value chain, with chip design leading at 33 percent, embedded at 17 percent, process related at 16 percent, EDA at 13 percent, MEMS/sensors at 10 percent, and testing/verification at 10 percent.
Key players in the semiconductor ecosystem are already building a presence in India. Major demand drivers of electronics in India include growth in per capita income and corporate spend on electronics. Per capita income in India has doubled between 2004-05 and 2010-11 to touch Rs 54,835 per annum. There is government focus on e-governance infrastructure and applications. There is growing penetration of Internet including broadband and mobile phones. Mobile phone connections in India have grown from 1 million in 1998 to 851 million subscribers as of June 2011. There is a National Optical Fiber Plan. There is also a need for innovative products at low cost — medical electronics and sub $100 tablet for education.
There is a compelling rationale for developing semiconductor manufacturing capabilities in India. India’s strategic priorities include national and information security, sourcing stability and self reliance, reducing technology import bill and exports, provide platform for scientific innovation and R&D based industries, and energy conservation and alternative sources.
India has the economic opportunity to raise the manufacturing capability of telecom infrastructure and smart cards from $3.7 billion in 2010 to $17.9 billion by 2020. There are opportunities for IT and office automation from $2.5 billion to $11.2 billion, for consumer electronics and mobile phones from $1.3 billion to $5.3 billion, for aerospace and defence from $0.2 billion to $0.5 billion, and for LEDs from $0.1 billion to $0.9 billion, respectively.
ESDM is emerging as a priority sector for India. There are major segments of demand, such as telecom products and equipment at $152 billion, exports at $80 billion, semiconductor design at $60 billion, IT systems and hardware at $56 billion, high-tech manufacturing at $24 billion, consumer electronics at $16 billion, etc.
India’s electronics industry is expected to grow at 22 percent per year, which is 7x the global rate. The India story comprises a robust GDP growth, which is projected to quadruple to $4 trillion by 2020. It has a large domestic market. Several infrastructure initiatives are being planned. India also has a large human capital — world’s third largest pool of scientific and technical manpower.