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Date: 13-09-13

Come what may, India will have a semiconductor chip fab

On Thursday Sept 12, 2013, Union Government has given in-principle approval of setting up two semiconductor chip fabs in India. These fabs may need to be established very quickly to take up the immediate opportunity of millions of Set Top Box ICs, Security id chips for smart cards and other Government ID projects. These are just two examples. India needs billions of chips. Not only as import substitution but also to make customized chips for range of innovative ideas exclusively for Indian market. It is clear now India surely going to have a semiconductor fab. But what is more important is the speed of implementation. Fab approval should have been faster. Now the stake holders have to really work faster and extremely smarter like the most advanced VLSI EDA design tools, which can now predict the bug at the primary stage of the design.

Making the fab successful is not easy, but India is blessed with timing advantage, where many things are in favour of India. Teams across the industry (not only electronics) and Government has to work like a single organization which they can name it as "India Semiconductor Inc!". Leading chip makers go aggressive now to design chips better than what Indian Fab can design and sell. India fab efforts need to be very robust to fight all kinds of market forces. Taiwan and China are so well equipped in the semiconductor industry, India fab need to have some extra-ordinary market strategies to fight with established players in the industry. India need to leverage healthy good-conditioned present resources to the max, while also creating newer resources. As important as fab, for the Indian electronics industry is having its own modern operating system and a processor architecture. Government can utilize defense, public sector and established private companies in designing OS and processor architecture.

Telecom Minister Mr. Kapil Sibal and his team need to be appreciated for the deep understanding of the electronics and semiconductor industry and the need of semiconductor fab in India. Preferential market access policy need to be implemented, provided it is not misused (strictly no corruption and nepotism). Any multinational company can be part of preferential market access provided they have manufacturing and design activity of the product done in India. In this case of India based fab, if the foreign investor designs and makes chips in India, that company can be given preferential market access. Every country defends its economy by framing the laws suitable for their growth. There is nothing wrong in India having preferential market access to security sensitive products. Government can easily argue its case with foreign lobbies which are working against preferential market access.

India can't depend on human labour alone, it has to have a modern automated manufacturing technologies in solar, energy, and many other areas. Today's innovation is driven by software, software is powered by hardware, and hardware is powered by semiconductor chips. In the above chain, India does not have the fundamental basic block of semiconductor and hardware. With multiple number of semiconductor fabs and other eco, India can reverse the trade imbalance.

Below are the points from Draft National Telecom Policy- 2011 worth taking note by Indian electronics and semiconductor industry:

Important objectives of the policy relevant to Indian electronics and semiconductor industry:

Promote indigenous R&D, innovation and manufacturing that serve domestic and foreign markets.

Promote the domestic production of telecommunication equipment to meet 80% Indian telecom sector demand through domestic manufacturing with a value addition of 65% by the year 2020.

Provide preferential market access for domestically manufactured telecommunication products including mobile devices, SIM cards with enhanced features etc. with special emphasis on Indian products for which IPRs reside in India to address strategic and security concerns of the Government, consistent with international commitments.

Encourage adoption of green policy in telecom and incentivize use of renewable resources for sustainability.

Strategies proposed in the policy relevant to Indian electronics and semiconductor industry:

To spur the domestic telecom equipment manufacturing segment to meet the indigenous demands for becoming self-reliant in telecom/ICT equipment design and manufacturing.

To encourage indigenous manufacturing of cost effective customer end terminals and devices including mobile devices, SIM cards with enhanced features etc.

To ensure focused indigenous development in the telecom sector, efforts would be concentrated towards a definite policy direction by creating a suitable road-map to align technology, demand, standards and regulations, after considered evaluation of candidate technologies and the emerging trends.

To create fund to promote indigenous R&D, IPR creation, entrepreneurship, manufacturing, commercialising and deployment of state-of-the-art telecom products and services.

To ensure security in an increasingly insecure cyber space, indigenously manufactured multi-functional SIM cards with indigenously designed chips incorporating specific laid down standards are considered critical. The whole electronics eco-system for this and other purposes, starting from the wafer fab needs to be built and hence is viewed as a key policy objective and outcome.

To recognize the role of new technologies in furthering public welfare and enhanced customer choices through affordable access and efficient service delivery. The emergence of new service formats such as Machine-to-Machine (M2M) communications (e.g. remotely operated irrigation pumps, smart grid etc.) represent tremendous opportunities, especially as their roll-out becomes more widespread.

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