India ready with incentives to build semiconductor chip ecosystem, says Rai

Invest India is collaborating MeitY, ISM to bring global semiconductor firms to create a full-fledged chip manufacturing ecosystem

Invest India is working closely with the India Semiconductor Mission (ISM) and the Ministry of Electronics and Information Technology (MeitY) to bring semiconductor, semiconductor equipment, and electronics manufacturing services companies from Japan, South Korea, Taiwan, Germany, the Netherlands, and the United States for building a full-fledged chip fabrication ecosystem in the country, according to Nivruti Rai, managing director (MD) and chief executive officer (CEO).

 

“There are only a few countries that have the ability and investment we want to draw in. We are working with all of them to build the ecosystem so that we become cost-competitive,” Rai told Business Standard in an exclusive interaction.

 

Rai worked with Intel India for 29 years, serving as country head for seven years, before being appointed CEO of Invest India in July 2023.

 

As the country’s premier investment promotion body, Invest India understands what it takes to build a semiconductor ecosystem — an industry that requires deep-rooted planning and sustained investment. India, she said, is already prepared with design engineers, incentives, and other supportive factors that will help catapult the country into becoming a key player in the global supply chain.

 

Having cleared one chip fab unit, one silicon carbide compound semiconductor fab unit, and eight other assembly, testing, marking, and packaging as well as outsourced semiconductor assembly and test units, the focus is now on bringing raw material suppliers and component makers to the country under the second phase of the India Semiconductor Mission, she added. 

 

Semiconductor equipment alone accounts for nearly 50 per cent of the cost of setting up a new manufacturing unit, while building materials make up another 30–35 per cent, and labour costs about 15 per cent of the total bill of materials, Rai said.

 

“What happens now is that we look at the entire assembly and start moving back up the value chain, all the way to raw materials. Then we have the equipment. We have to look at the building blocks for equipment and slowly get into the phase where companies start seeing value in India,” she explained.

 

Apart from facilitating units to make high-purity chemicals and gases such as boron, phosphorus, and fluorine; metals such as copper, silver, and gold; and minerals such as tantalum and neodymium, Invest India is also looking to promote the establishment of domestic chip design companies and research labs, she said.

 

“I have the onus to find investors willing to back semiconductors, which are fundamental building blocks. Semiconductors are an opportunity that will drive economic resilience for us. It is no longer limited to technological progress,” Rai said.