
Lucknow: The Uttar Pradesh Semiconductor Policy is considered a gamechanger for several reasons, especially in the context of India’s growing focus on becoming a global semiconductor hub. Here’s an analysis of why this policy is significant, backed by numbers:
1. Boosting India’s Semiconductor Manufacturing Capacity
- Current Global Market: The global semiconductor market was valued at around $556 billion in 2022 and is projected to reach $803 billion by 2028, with a CAGR of 6.6%.
- India’s Share: India currently holds a minuscule share in semiconductor manufacturing, with most production concentrated in East Asia. By implementing this policy, Uttar Pradesh aims to contribute significantly to increasing India’s share in this market.
- Policy Goal: The policy aims to attract an investment of ₹50,000 crore (approx. $6.7 billion) over the next 5 years. This includes setting up semiconductor fabs, display fabs, and other supporting industries.
2. Creating Jobs and Skill Development
- Direct and Indirect Employment: The semiconductor industry is known to create a multiplier effect in job creation. For every direct job in semiconductor manufacturing, approximately 4-5 indirect jobs are created.
- UP’s Target: The policy aims to create over 1 lakh direct jobs and 5 lakh indirect jobs in the next decade. This includes opportunities in manufacturing, design, research and development, and supply chain logistics.
- Skill Development: Uttar Pradesh plans to establish Centers of Excellence (CoEs) and training institutes in collaboration with global semiconductor companies to train the local workforce in advanced semiconductor technologies.
3. Economic Impact and Investment Attraction
- Investment Potential: With the state providing incentives such as capital subsidy, land subsidy, and exemption from electricity duty, Uttar Pradesh aims to attract both domestic and foreign investments in the semiconductor sector.
- Incentives Breakdown: The policy offers up to 25% capital subsidy on plant and machinery, along with up to 100% exemption on stamp duty and electricity duty for up to 20 years.
- FDI Attraction: Given the current geopolitical tensions and the global push to diversify supply chains, the policy is expected to draw FDI from major semiconductor companies looking to establish a base in India.
4. Enhancing Technological Infrastructure
- Fab Infrastructure: The policy focuses on setting up semiconductor fabrication units, essential for producing advanced chips. Each fab can cost between $3 billion to $5 billion and can produce chips ranging from 28nm to 7nm technology nodes, crucial for applications in AI, IoT, and 5G.
- Design and R&D: Uttar Pradesh plans to foster a semiconductor design ecosystem by providing design companies with incentives like design infrastructure grants and support for developing prototypes.
5. Boosting Local Electronics Industry
- Current Electronics Market: India’s electronics market is expected to grow to $400 billion by 2025. Semiconductors are a key component in this market.
- Reducing Import Dependency: India currently imports nearly 100% of its semiconductor requirements. The policy aims to reduce this dependency by promoting domestic manufacturing, which will also save foreign exchange and make the electronics industry more self-reliant.
- Supply Chain Integration: The policy also envisions integrating the entire semiconductor supply chain, including materials, equipment, and logistics, to make Uttar Pradesh a one-stop destination for semiconductor manufacturing.
6. Strategic Location and Policy Alignment
- Geographical Advantage: Uttar Pradesh’s central location in India provides logistical advantages for supplying semiconductors to various parts of the country.
- National Policy Alignment: The state policy aligns with the central government’s $10 billion incentive scheme to promote semiconductor and display manufacturing in India, ensuring a cohesive strategy at both state and national levels.
In summary, the Uttar Pradesh Semiconductor Policy is poised to be a gamechanger due to its potential to significantly boost India’s semiconductor manufacturing capacity, create a large number of jobs, attract substantial investments, and reduce the country’s dependence on semiconductor imports. The policy aims to position Uttar Pradesh as a major player in the global semiconductor industry.