NEW DELHI: India may allocate a larger capital incentive package for the second edition of the India Semiconductor Mission (ISM 2.0), exceeding the previous $10 billion outlay, according to Ashok Chandak, president of the India Electronics and Semiconductor Association.
“The capital outlay announced last time was about $10 billion. Our expectation is actually more than this. It could be anything — $10 billion, $20 billion, or somewhere in between — I do not know. The industry’s expectation is that it should go beyond the previous allocation,” said Chandak.
India began its semiconductor push in 2021 with an approved incentive package of ₹76,000 crore under the India Semiconductor Mission. So far, the government has approved 10 major semiconductor manufacturing projects involving cumulative investments of around ₹1.60 lakh crore across six states.
Chandak said semiconductors are becoming increasingly critical for the economy and stressed that the scope of the Semiconductor Mission should be expanded beyond fabs and assembly facilities. According to him, the expanded scheme should also include chemicals, gases, materials, semiconductor equipment, and equipment subsystems.
“Some of the equipment makers are global companies, but if they can also source subsystems for equipment from India, that could become a very good opportunity,” said Chandak.
He further noted that India already has a strong chemicals, gases, and materials industry, but most domestic companies are yet to manufacture semiconductor-grade materials that require extremely high purity levels.
“India already has a very robust gases, chemicals, and materials industry. But these companies do not yet manufacture semiconductor-grade materials, which require purity levels like 99.999%. For them as well, the incentive should be sizeable enough so they can expand their activities into semiconductor manufacturing capability,” he added.
On the ongoing crisis in West Asia and its impact on India’s electronics sector, Chandak said geopolitical tensions are affecting supply chains globally, though he does not expect a disruption similar to the COVID-era semiconductor shortages.
“So I do not think the situation will become a total black hole like what happened during COVID, when there was an extreme shortage. There will be price hikes, and consumers will have to bear some of that impact,” said Chandak.
Commenting on the rise in memory chip prices, Chandak said growing artificial intelligence workloads are driving demand for high-end memory solutions such as High Bandwidth Memory (HBM).
He said most manufacturers are shifting production capacity toward HBM due to rising AI demand, resulting in lower availability of conventional DRAM and flash memory products.