When a major investment project is announced, it is natural for state governments to set it up in their respective regions, offering incentives, in the hope of being able to tell voters that they How committed are you to ‘development’? In one such competition, Maharashtra lost to Gujarat for the Vedanta-Foxconn project that proposes to invest 1.54 lakh crore for the production of semiconductors and displays. This has sparked political wrangling, with allegations ranging from incompetence on the part of the new political leadership of the Maharashtra government to direct investment in electoral Gujarat from the Centre. It would be helpful to take a step back and look at things in perspective.
Some things stand out.
One, it is good for India and for the chip-hungry world economy that a new manufacturing plant for semiconductor chips is being set up.
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Two, semiconductor fabs are capital- rather than labor- intensive. A new $4 billion global foundry plant in Singapore to manufacture 450,000 chips will employ just 1,000 people. The numbers will be slightly different in the Indian context. GlobalFoundries already has a packaging and testing unit in place for its existing fab in Singapore, and that last part of building the chip will not require installing one from scratch. The packaging and testing of silicon employs more people than the pre-automated, stages of chip making. The Gujarat unit also has a performance component, which will employ additional people, but will again be relatively capital-intensive in nature.
Third, the potential for real employment is in downstream industries that use semiconductors. If Vedanta lives up to its promise of setting up large-scale electronic manufacturing in Maharashtra, the state government could generate more jobs per incentive of Rs.
Fourth, it would be wrong on the part of the Center to interfere in the choice of investment destination of companies out of alternative sites in different states. Of course, there is no evidence that the Center has left no stone unturned in playing the role of a favorite in the present case. The basis for this suspicion lies in a letter written by the chairman of Vedanta to the Maharashtra government, seeking alignment with the Center for the project. This may reflect more industrialists’ willingness to be in the center’s good books than any real indication of any local preference on the part of the Center for the proposed investment. Vedanta later claimed that the selection of its site was based on expert advice and not political considerations.
India’s chip-making journey began early, but was derailed in 1989 with a mysterious fire at the semiconductor complex in Mohali, five years after it was installed, as part of a vision to prepare India for the 21st century. In. India has been dependent on imports not only for chips but for most of the electronics since then. Now, with advanced semiconductors becoming a differentiator between the strategically affluent and the underprivileged, and chip imports rivaling oil imports as a spender of foreign exchange, India can’t stop building its own chip-making capacity. Is.
It is worth noting that the Chips 4 alliance formed by the US this March includes Taiwan, Japan and South Korea in addition to itself. India, despite its chip design and software capability, is not taken seriously enough to be part of any technological alliance. India’s defense ties with Russia—India and Russia jointly produce BrahMos missiles in India for sale to third countries—could also play on the US strategic mind when deciding candidates for any such alliance.
India needs to develop the ability to not only make chips but also automate electronic design, build machinery to etch nano-meter-wide grooves on semiconductor wafers for ultra-thin circuitry, build complex circuits and pack millions of vapors into those grooves. Metal deposition is required. of transistors on small wafers. These technologies are not available off the shelf and now require licensing approval in the US.
Instead of wasting time on one particular semiconductor project, Indian states would do well to crystallize other parts of the semiconductor ecosystem, both to create high-value jobs and to create prerequisites for true strategic autonomy.
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