The world is facing an unprecedented shortage of computer chips. Industries across the board are suffering. From consumer electronics to car manufacturers. The shortage is either driving up costs Or forcing companies to cut back on production.
This shortage affects you more than you realise. That’s because these chips drive our world now. And as we depend more on gadgets. And move online in bigger numbers. We’ll need more chips. Right now, the demand is far more than the supply. And the production is limited to a few big players. Chipmakers are spending heavily on expanding their output. And India has a pitch for them.
The proposal is simple. Make In India. And get more than one billion dollars in cash incentives. Reports say that India wants to offer more than one billion dollars as incentives to companies who make their chips in India.
“The government will give cash incentives of more than $1 billion to each company which will set up chip fabrication units,” a senior government official told Reuters. “We’re assuring them that the government will be a buyer and there will also be mandates in the private market (for companies to buy locally made chips),”
The govt is apparently also ready to provide assurances to manufacturers that buyers will line up. The report says the government will buy the chips and also set up a mandate for private players. Companies in India could be asked to buy Made in India chips. Suppliers who make chips in India will be tagged as “Trusted sources”. And these chips will be eligible for use in a range of products from CCTV cameras to 5G equipment and everything in between.
This may be a compelling offer. But, it’s not a unique one. Governments around the world are subsidising chip makers. India has now jumped into the fray. But attracting these businesses to India won’t be easy. The competition is intense. US President Joe Biden wants 50 billion dollars to boost the US chip industry. The proposal is part of his two trillion-dollar infrastructure plan. He plans to hike taxes on the foreign earnings of American companies to raise these funds. Biden wants to spend that 50 billion dollar budget in two areas.
Where does that leave us? Rising demand for chips, shortage of supply and a race between two big players. India should see this as an opportunity. India should open its doors, project itself as a worthy candidate for semiconductor companies, and play up its credentials. India is the world’s second-biggest mobile manufacturer after China. It has the wherewithal to become the global hub for chips.
