Relevance: GS-3 (Science & Technology & Industrial Policy) | GS-2 (International Relations) | Source: The India Express

1. The News 

Prime Minister Narendra Modi’s visit to the Netherlands highlighted a strategic shift toward “technology diplomacy.”

A major milestone of this engagement was Tata Electronics signing a Memorandum of Understanding (MoU) with the Dutch tech giant ASML to support India’s upcoming $11 billion semiconductor fabrication plant in Dholera, Gujarat.

2. Core Technological Concepts 

• ASML and Its Global Monopoly: ASML is a Dutch multinational corporation that holds an absolute global monopoly on a highly critical segment of the chip-making ecosystem.
• Extreme Ultraviolet (EUV) Lithography: Lithography is the process of using light to print microscopic circuit patterns onto silicon wafers. ASML is the world’s only manufacturer of EUV lithography machines, which use ultra-short light wavelengths to print the smallest, most advanced microchips used in AI and smartphones.
• 300 mm Fabrication Plant: The Tata facility in Dholera is setting up a 300 mm wafer fab. Larger silicon wafers allow more chips to be printed at once, reducing per-chip costs and boosting manufacturing output.

3. Geopolitical Drivers: Why the Netherlands?

• US-China Technology War: The US has imposed strict export controls to stop China from acquiring advanced chip tech. It has pressured allies, including the Netherlands, to restrict ASML from selling its cutting-edge machines to Chinese entities.
• The “China-Plus-One” Strategy: Due to these geopolitics and pandemic supply shocks, global tech companies are actively shifting and diversifying their manufacturing bases away from China.
• India’s Position: India is pitching itself as a politically stable, democratic, and trusted alternative destination to absorb this shifting global supply chain.

4. India’s Policy Push and Objectives

India wants to move beyond “low-cost assembly” and achieve digital sovereignty through several targeted programs:

• India Semiconductor Mission (ISM): An independent administrative division under the Ministry of Electronics and Information Technology (MeitY) tasked with building a complete domestic semiconductor ecosystem.
• PLI Scheme for Semiconductors: A ₹76,000 crore incentive package providing heavy government subsidies to companies setting up chip manufacturing (Fabs) and packaging units in India.
• Design Linked Incentive (DLI) Scheme: Provides financial and infrastructural support specifically to domestic firms working on advanced chip design.

5. UPSC Value Box

• Capital Intensity: Building and upgrading semiconductor fabs requires billions of dollars continuously. Sustaining investments beyond initial government subsidies remains difficult.
• Infrastructure Requirements: Fabs require millions of gallons of ultra-pure water daily and an uninterrupted power supply. Even a microsecond voltage fluctuation can ruin an entire production batch.
• Skill Gap: While India has excellent chip designers and software engineers, it faces a severe shortage of hardware engineers skilled in high-tech clean-room manufacturing operations.

With reference to the semiconductor industry and India’s technology initiatives, consider the following statements:

1. Extreme Ultraviolet (EUV) lithography technology is used to print highly complex circuit patterns on silicon wafers for advanced microchips.
2. The India Semiconductor Mission (ISM) functions as a specialized, independent division under the Ministry of Electronics and Information Technology (MeitY).
3. Under the Design Linked Incentive (DLI) scheme, the government offers financial support exclusively for the setup of physical semiconductor fabrication plants.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Correct Answer: (a) 1 and 2 only