The second phase of the India Semiconductor Mission has received a much larger budget than the first phase, with Rs 1.27 lakh crore allocated to support different areas of semiconductor and electronics manufacturing. Similar to the first phase, it is expected that most of the budget will be allocated to the selected individual projects, either as a capital subsidy (in which case, the government might contribute less than the 50% that it agreed to in the first phase) and as manufacturing-linked incentives paid on a per-unit basis once sales are completed. An added element of Incremental incentive boosters will be made available for those manufacturing those electronic goods that make use of domestic technologies and components.
It promises to extend the government’s stated intent of making India a strategic hub for the electronics value chain and build those capabilities in-house, with both intellectual and human capital, when only a few countries globally command such capabilities across different components of the value chain.
The government had stated from the very beginning that this would be a multi- decade process and its continued patronage with a more substantive kitty of money is indeed welcome. While this might not be a high job-generating industry per se, it is their strategic, geo-political considerations to deploy public funds. Whether this was a good initial wager is still largely unclear, as many of the first round of awarded projects have still to commence commercial production.
Some technology is well beyond the reach of all economies: The complexity of the machines that print nanoscale feature images from “extreme ultraviolet,” or EUV, lithography, currently mastered only by the Netherlands with a looming challenge
from Japan, means the thought of India’s committing investment to such a technology is enticing, but unfathomable. Such strategic capabilities have hard payoffs. Such a capacity to do “hard things” will breed resistance to India rapidly developing the capability and attracting talent.
