India needs to develop a broader semiconductor ecosystem over time: Subbiah

Murugappa Group scion says India needs a China-style sectoral roadmap for growth, bets big on semiconductors and EVs

Vellayan Subbiah, a fourth-generation Murugappa group scion and chairman of CG Power, executive vice-chairman of Tube Investments of India (TII), and chairman of Cholamandalam Investment and Finance Co, believes India should take a cue from China and identify key sectors that can drive manufacturing growth. In a video interview with Shine Jacob, he talks about the group’s semiconductor foray, the role of electric vehicles (EVs) in the country’s future, and the need for a push towards India being a product nation. Edited excerpts:  

 

You have turned around debt-ridden CG Power. The company is setting up a ₹7,600 crore outsourced semiconductor assembly and test (OSAT) facility in Sanand. What is its status and what is your outlook on the industry? 

With regard to the Sanand plant, the first line or the semicommercial line will launch most likely by September. The full line will start functioning by 2027. India needs to develop a broader semiconductor ecosystem. It has three parts — design, fab, and packaging. I think we need to develop a more holistic perspective and should ensure that all three parts develop for India to progress on this front. Government policy with regard to manufacturing has been supportive. We need to think of developing an ecosystem, and zero in on the segments we should get into, and how. That, I think, is a bigger part. 

 

Will the financial trouble of United States-based silicon carbide player Wolfspeed affect your Sanand plans, as your partner Japan’s Renesas Electronics is a long-term supplier to them? 

It will not affect the Sanand project. Even Renesas is clear that it will not impact our plans. Wolfspeed is an isolated incident and there is no connection at all. Wolfspeed is a silicon carbide manufacturer in America, and Renesas had some exposure to that. Renesas is a big company. Hence, that exposure does not affect it in any significant way. The Japanese major continues to be supportive, and that relationship is strong and continues.

 

TII, through TI Clean Mobility, is investing in EVs. Do you have any plans to foray into two-wheelers and passenger vehicles too? Also, what is your take on the rare-earth crisis? 

The two-wheeler space is crowded. We do not want to enter passenger vehicles now. We prefer to be in the segments where we are. 

We are focused on EVs across the four platforms we are in — three-wheelers, trucks, tractors, and light commercial vehicles. They are more productive segments and concerned with the productive end of the economy as against the consumption end.

Rare earth, in the medium to long term, will become less of an issue. We need to think about what we are going to do to protect ourselves in the long term. There again, China has done a good job in raw materials. We don’t have the petroleum resources. We need a more focused approach to EVs, and hydrogen is a technology for the future, which is not viable at the current cost point. 

How are you looking at the possible trade deal between India and Amrica? 

Nobody knows how the macro is going to play out. It is likely that India will get into a trade deal. I feel that the opportunity for India is large in manufacturing. Most of the Western world wants to look at lower-cost manufacturing. India is a huge partner there. What we need to think of is how systematically we will do that. Look at what constitutes manufacturing gross domestic product (GDP) for a place like China and then compare it with India. Then we should think about where we need to move. In India, the constituents of manufacturing GDP are different. We need to get a sense of the product constituents we need to have if we want to be a more holistic manufacturing nation. For countries like China, their policy articulates the 10 segments in which they want to have a strong presence. 

EVs are a 100 per cent shift that is going to happen. Another one, in the medium to long term, is capital equipment, and the third one, a natural strong point for us, is chemicals and pharmaceuticals. The fourth one is electricals, and the fifth is electronics. However, electronics comes with its own nuances. That is why I believe that something like semiconductors comes with its own core base. Mainstream electronics we have to focus on, but China has absolute dominance. It will take us a while on that, and semiconductors can be a quicker path for us. The good thing with all these segments is that they have a limited dependence on natural resources. 

 

How are you looking at CG Power’s businesses like power and railways, and its future? 

In power, our two main areas are switchgears and transformers. We are looking at how we can broadbase around them. We are looking at opportunities and some collaboration as well to become a full-service supplier to the industry. That is a work in progress. 

Railways is a great opportunity. There is innovative thinking from the government to modernise our railway infrastructure. I think that provides a lot of opportunity to grow.