The Indian government is reportedly offering more than a billion dollars each to semiconductor companies in a bid to encourage them to set shop in India. As per a report by Reuters, the Narendra Modi-led central government is giving this major cash incentive to chip makers in order to improve the country's smartphone assembly industry and also strengthen its electronics supply chain.
While India has already emerged as the world's second-biggest mobile phone market, the government now appears to be using cash incentives as a means to further enhance the country's position as a hub for manufacturing phones and other gadgets.
Citing unnamed government officials, the report goes on to add, "The government will give cash incentives of more than $1 billion to each company which will set up chip fabrication units... We’re assuring them that the government will be a buyer and there will also be mandates in the private market (for companies to buy locally made chips).”
It goes on to add that there's been no decision on how to disburse cash incentives to participating companies. However, the government has asked the industry for feedback to quickly find a solution.
The government's move to encourage the setting up chip fabrication units in the country appears to be in-line with what we've seen from other countries across the globe in the recent past. The idea here appears to be to reduce dependence on countries like China and ensure a reliable supply of semiconductors for the needs of the country -- across various markets like electronics, smartphones and even electric vehicles in the future.
With the telecom industry swiftly moving towards newer generation technologies, this move by the government to encourage the manufacturing of chips within the country will also enable it to create trusted sources for the manufacturing of equipment such as CCTV cameras and even 5G equipment. Further, the manufacturing of processors will also help bring down the price of certain products such as smartphones and gadgets.
Interestingly, this also comes at a time when the global market is suffering from an acute shortage of semiconductors -- a problem that is only expected to grow worse going forward. And with semiconductors being used to create chips that are now used in pretty much everything -- from phones to consoles, cars, and even secure military-grade equipment -- markets across the globe are reaching a stage where they will have to curtail production owing to the shortages in the supply of semiconductors.
If the government manages to convince chip makers to set up manufacturing units in the country, it will also help establish India as a major exporter of semiconductors, thereby not only helping the world with its chip shortage but also helping the government create new jobs and work towards achieving its goals under the Make In India initiative.