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India to pump $30bn into tech sector, chip supply chain

India will spend $30 billion to overhaul its tech industry and build up a chip supply chain to ensure it is not “held hostage” to foreign providers, the country’s top diplomat to Taiwan told Nikkei Asia in an interview.

The investment initiative is aimed at increasing local production of semiconductors, displays, advanced chemicals, networking and telecom equipment as well as batteries and electronics, said Gourangalal Das, director-general of the India-Taipei Association, the South Asian country’s de-facto embassy in Taipei.

“There is a rise in demand for semiconductors,” Das said, adding that India’s chip demand is growing at nearly double the global rate each year. “By 2030, India semiconductor demand will reach $110 billion. So by that time, it will be over 10% of global demand.”

“We need some assurance that our demand for semiconductors is not held hostage to the vagaries of supply chains — something that we saw during the pandemic,” the diplomat said.

Unlike the U.S. and European Union, which aim to bring some of the most cutting-edge chip production to their shores, Das said his country is looking to bring in more “mature” chips. These include chips made with the relatively less advanced 65-nanometer to 28-nanometer production technologies and are widely used in connectivity chips, display drivers, controller chips for electronics products and electric vehicles.

In addition to a massive domestic market, India has an ample pool of engineers, which will help the country attract foreign investors and overhaul the local electronics industry, Das said.

He added that India is open to collaborations with Taiwanese tech players who have semiconductor, display and electronics manufacturing expertise. One early entrant is iPhone assembler Foxconn, which has partnered with Indian natural resources conglomerate Vedanta to build a semiconductor plant in the country.

Apart from chips, India sees displays as critical components, as it hopes to become more self-sufficient in the production of TVs, tablets, smartphones and automobiles. “The demand is going to grow and you cannot be in a perpetual state of import dependency,” Das said.

He added that India was not only looking at liquid crystal diode (LCD) display technology, which is widely used in TVs, but also at the higher-end organic light-emitting diode (OLED) displays that have become the mainstream in premium and foldable smartphones.

One area India is not lacking, Das said, is in tech talent. The country has a huge pool of “young talent” and is still enjoying a “demographic dividend” that could last till 2050 even as many East Asian countries are already facing population declines, he said.

India is looking to meet not only its own needs for tech talent but also to fill the skills shortages worldwide, Das said. Chip companies in particular are struggling to find enough qualified engineers to keep up with their global expansion plans.

India has set a target of producing 85,000 highly qualified engineers in 10 years.

Das said the key aim of India’s $30 billion initiative is to build a complete supply chain ecosystem. Around $10 billion of that sum will go toward two chip facilities and two display plants. About $7 billion is planned to be given to the electronics industry, including those manufacturing giants like Foxconn and fellow iPhone assembler Pegatron. The remaining $13 billion will be reserved for “affiliated services like telecom, networking, solar photovoltaic, advanced chemistry and battery cells,” he said.

The government introduced “Digital India,” the country’s flagship economic transformation program to upgrade its industries, in 2015. Those efforts have been further accelerated by the pandemic.

India has developed several tech hubs in the south over the years. Foxconn, BMW and Samsung, among others, have already set up plants there, while major global chip developers such as Intel, Qualcomm and Nvidia operate research and development centers locally. The western India state of Gujarat is home to key manufacturing plants of leading chemical producers such as Tata Chemicals, Gujarat Fluorochemicals and Atul.

Although India does not yet have a chip supply chain like the U.S., EU or Japan, the country has a number of key advantages, Das said. In addition to its large number of engineers, these include natural resources for metals, gas and chemicals. For instance, India is the world’s leading producer of sulfuric acid and ammonia, which, after being purified, can be used in chip manufacturing processes.

“Even though India has not gone into the semiconductor [industry] in a big way, it has all the associated industrial capabilities, which can be tweaked a little bit or upgraded a little bit to meet the demands,” Das said. “It’s not like India’s learning curve is going to be very steep… But we will be patient and we will be quite persistent.” Nikkei.Aisa

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