Electronics is one of the most intensive global value chain sectors in the world, and its global value chains are largely concentrated in a few countries in Asia. The semiconductor industry, which is valued at over $400 billion worldwide, is the fastest growing electronics sector.

Semiconductors are the cornerstone of modern electronics and are driving the next phase of the digital revolution.

The use of semiconductors ranges from smartphones and cloud servers to modern cars, industrial automation, critical infrastructure and defense equipment. The Indian semiconductor market is expected to reach $20 billion by 2026.

The India Semiconductor Mission, a specialized business unit of Digital India Corporation, was founded by Union Information Technology Minister Ashwini Vaishnaw. The goal of the mission is to create a thriving semiconductor and display ecosystem that will help India become a world leader in electronics manufacturing and design.

The global semiconductor industry market has a total value of $2 trillion. The largest global segment of the industry is computer systems and peripherals, which accounts for over 26% of the overall market. (NITI Ayog).

The Indian semiconductor industry is currently responsible for around 1.5% of the world’s production of electronic equipment.

The Government of Gujarat announced on July 30, 2022 a ‘Gujarat Semiconductor Policy 2022-27’ with a target to generate at least 2,00,000 new employment opportunities over a period of five years.

The government also decided to develop a “semi-converted town” which would be part of the Dholera Special Investment Region.

What is a semiconductor?

A semiconductor is a substance that has specific electrical properties that allow it to serve as the basis for computers and other electronic devices. It is usually a solid chemical element or compound that conducts electricity in some conditions but not in others.

This makes it an ideal medium for controlling electric current and everyday electrical appliances.

A substance that can conduct electricity is called a conductor and a substance that cannot conduct electricity is called an insulator. Semiconductors have properties that lie between the conductor and the insulator.

A diode, an integrated circuit (IC), and a transistor are all made from semiconductors.

Less than two months after the policy was announced by the government, two major companies – Vedanta and Foxconn have signed Memoranda of Understanding (MoU) with the state government to set up a semi- drivers with an investment of Rs 1.54-lakh crore.

Prime Minister Narendra Modi tweeted: “The investment committed by Vedanta and Foxconn Group for the establishment of the unit in Gujarat will give a boost to the ancillary industries ecosystem and help India’s MSMEs.

Vedanta Semiconductors of Vedanta Group will set up an integrated semiconductor manufacturing unit and OSAT (outsourced semiconductor assembly and test) facility in Gujarat with an investment of Rs 60,000 crore.

The unit will run on 28nm technology nodes with a 300mm wafer size and the display fabrication unit will produce Generation 8 displays for small, medium and large applications.

For investors, Gujarat provides a conducive environment for establishing semiconductor factories as it was the first to launch a dedicated semiconductor manufacturing policy which provided strong support in subsidies on purchase of land, capital investment, reimbursement of stamp duties, fixed water tariff, as well as electricity tariff subsidy for a period of 10 years.

Why can semiconductor policy flourish more in Gujarat?

There are many reasons which include the presence of excellent industrial infrastructure, with the support of electricity, water, gas and other related infrastructure, a world-class export-oriented industrial ecosystem with 48 major ports and 17 operational airports.

Special Investment Regions (Dholera SIR, GIDC, Estates, Electronic Manufacturing Cluster in Mundra), Availability of Skilled Manpower Required for Electronic Manufacturing Sector as well as Training and Skills Development Centers in state-of-the-art technology, etc.

Under the new policy:

The state government will provide hefty subsidies on electricity, land and water tariffs to entrepreneurs interested in investing in semiconductors or display manufacturing.

The main objective of the current government is to make Gujarat a forerunner in the development of Electronic Systems Design and Manufacturing (ESDM) ecosystem.

According to reports, the Gujarat policy focuses on directing a significant portion of the investments made under these India Semiconductor Mission (ISM) policies to Gujarat.

The policy will provide additional capital assistance to 40% of the capital assistance granted by the Center for projects approved under the ISM.

The Semiconductor Policy will provide assistance to one project each, Semiconductor and Display Manufacturing. In the event of multiple applications, the state-appointed high-level committee will make recommendations based on project references.

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