ECMS can raise semiconductor value addition to 20%: Ajai Chowdhry

Ajai Chowdhry highlights the government's Electronics Component Manufacturing Scheme, aiming to raise domestic value addition in semiconductor components from 3-5% to 15-20% in the next 3-5 years

The government’s recently launched Electronics Component Manufacturing Scheme (ECMS) can increase domestic value-addition requirement to 15-20 per cent from the current 3-5 per cent for semiconductor components made in the country, said Ajai Chowdhry, cofounder of HCL and chairperson of the EPIC Foundation.

 

This value addition is likely to occur over the next three-five years as companies begin to obtain approvals and establish new plants in India, Chowdhry told Business Standard, adding that the next step should be owning intellectual property rights, especially in the design of semiconductor chips.

 

“There is another major area, which is still open. It is microelectronics, which covers areas like sensors, power products, and MEMS (micro-electro-mechanical systems). We have not done much about it. There are some research and development (R&D) institutes that have done very good work, but they are not creating products,” Chowdhry said.

 

Earlier this year in April, the government notified a ₹22,919 crore ECMS to promote domestic manufacturing of electronics comp­o­nents, display and camera modules, non-surface mount devices, multi-layer printed circuit boards, lithium-ion cells for digital applications, among others.

 

The scheme will also provide incentives for domestic manufacturing of other bare components such as resistors, capacitors, inductors, transformers, fuses, resistor networks, thermistors, and po­t­e­­­n­tiometers, used in the production of battery packs, mobile phones, laptops, tablets, and other handheld 

devices.

 

By July, the government had received proposals worth ₹7,500 crore to ₹8,000 crore from approximately 100 applications submitted by Indian and international companies.

 

With the introduction of this scheme to promote electronics component manufacturing, the government aims to complete the trifecta of semiconductor manufacturing, semiconductor component manufacturing, and manufacturing of finished products such as mobile phones, laptops, hardware, and other information technology (IT) products. 

To help Indian companies collaborate with global firms, especially in the field of microelectronics, the EPIC Foundation has formed a strategic partnership with the Fraunhofer Group for Microelectronics, according to Chowdhry. 

There can be three ways in which India can move ahead of other countries, especially in the microelectronics space. The first would be that companies already existing in the electronics manufacturing or semiconductor space also expand their presence into the sensors market. Companies in this space also need to invest in R&D as well as development of newer products, he said.

 

“Second, we need to take a very deep leap into the vertical integration of every product we make. For example, 40-50 per cent of the components in a drone are not made in India today. We now need to say that we will own the whole thing, from intellectual property (IP) to the final product,” Chowdhry said. 

Third, the government also needs to work with the industry to identify products that can be developed within the next two-three years, as well as those that will require more extended gestation periods of up to five years and beyond, he added.