- Some time ago, when the Central government announced its plans to open the nation for FabinIndia participation, Gujarat was among the first states to show interest.
- What the state of affairs is now, we try and understand.
In her maiden budget speech on 5 July 2019, Finance Minister Nirmala Sitharaman had a section titled Mega Investment in Sunrise and Advanced Technology Areas. The details of the section read as follows:
In order to boost economic growth and Make in India, the government will launch a scheme to invite global companies through a transparent competitive bidding to set up mega-manufacturing plants in sunrise and advanced technology areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Solar electric charging infrastructure, Computer Servers, Laptops, etc. and provide them investment linked income tax exemptions under section 35 AD of the Income Tax Act, and other indirect tax benefits.
In a 66 page document that used the word “mega” only thrice, it was pleasing to see that the first thing listed where steps needed for “mega investment” is being promised is for #FabInIndia.
What kind of “mega” investments are needed for fabs? McKinsey in this August 2020 report gives “fab module construction cost” as $0.4 billion for 65nm, $0.7 billion for 40nm and so on.
Unless one goes through the full report, it won’t be clear what all these numbers cover and if they assume some already existing base or infrastructure, yet I think the data adds on to my argument that to begin with, $1.2-$2 billion can get India a fab that can run tech-nodes which are good to produce a variety of chips, as explained here.
The state of Gujarat had put its hands up almost immediately after the 2019 July budget announcement of the Union Finance Minister, offering to “host” some of those manufacturing plants.
A 11 July 2019 dnaindia report quoted the then principal secretary of the state’s industries and mines department, M K Das, as saying:
The budget will help Dholera significantly. It is most suitable for high-technology and mass production facilities. We are analysing budget proposals and will try to maximise benefit.
The report, which also quotes the Finance Minister’s budget statement regarding semiconductor fabs goes on to say that:
Dholera Industrial City in the state is expected to get a major boost… Dholera Industrial City has vast tracts of undisputed land and so the synergy is natural, feel state government officials.
It has been more than a year since, and I think it is only natural that we ask a friendly question to both the governments — “How are things coming along?”
Though not an exhaustive list, here are some key news items related to #FabInIndia in that one year period:
* A December 2019 Indo-Israel study has specific recommendations for how to go about getting started on #FabInIndia, excerpts of which were quoted here.
* On 2 June 2020, MEITY announced three schemes — PLI, EMC 2.0 and SPECS — in order to boost electronic manufacturing.
* On 2 July 2020, Union Minister Ravi Shankar Prasad in this exclusive interviewgiven to Swarajya confirmed that “the Ministry of Electronics and Information Technology (MeitY) is also working on a separate policy towards setting up semiconductor FAB in the country“.
Recently, I happened to come across another detailed document titled “Electronic Systems Design and Manufacturing (ESDM) in India: A $120 Bn Market Opportunity” which is also available here.
Though it mentions “fabrication” only twice, and one of it is in connection with an old policy, the other mention of the word is in a “way-forward” chart as below:
The chart is interesting because the “scheme for setting up semiconductor FAB facility” is listed separately and a few months after the “expedited implementation of PLI, SPECS and EMC 2.0” schemes.
The above study is dated 28 May 2020, so if one considers June as the “Month 0”, the Government of India seems to have kept up with the initial timeline by announcing the three schemes in early June — months 1, 2 and 3 would be July, August and September.
Going by the chart, the Government of India must announce a scheme, and/or take some solid measures in the last quarter of calendar year 2020 towards enabling #FabInIndia.
Meanwhile, a 23 July 2020 news report in moneycontrol.com had mentioned this:
As part of the Atmanirbhar Bharat or self-reliant India mission, it is likely that semiconductor wafer fabrication (fab) manufacturing on a large scale for use as white goods’ components could be the first category. Sources told Moneycontrol that states like Gujarat would be identified as the manufacturing location for setting up factories.
Putting “old” promises and “new” hints together, one can hope that there are or soon will be some steps taken by the c
entral government and the Gujarat government in coming up with a plan to finally help some or at least one full fledged commercial fab take off in India.
After the construction of such a fab starts, it may still take two to three years to be in production.
Apart from all the strategic, technological and economic reasons, if one needs a political reason too, the answer may very well be in the Gujarat state election of December 2022.