To set up a semiconductor fabrication plant in India is not mere hubris. There is a growing market. There are also strategic reasons: India’s susceptibility to coercion increases due to its dependence on the import of semiconductors. Therefore, the government’s 2022 Semiconductor Mission is laudable. But today, there is still uncertainty about whether India will have a fab. In this context, it is important to understand why earlier attempts failed and examine alternate approaches.
Earlier attempts
The first serious attempt was made in 2007 in the form of a Special Incentive Package (SIP), but it yielded no response. The second attempt in the form of Modified SIP in 2012 fared better. After over two years of extensive outreach with practically all the major fab companies in the world, India came close to having a fab. Two consortia were approved by the Cabinet with an attractive set of incentives. Jaiprakash Associates in partnership with IBM and Israeli company TowerJazz constituted one, while the other was led by Hindustan Semiconductor Manufacturing Corporation along with ST Microelectronics. The two fabs together involved investment of $10 billion, and the government offered incentives amounting to nearly $5 billion in the form of cash and tax cuts. Locations for the fabs were finalised and land was allotted. But finally, both failed to mobilise resources.
