Relevance: GS-3 (Science & Technology, Economy, Indigenization of Technology) |Source: The Indian Express

1. What is the News?

The Union Cabinet has approved two new semiconductor plants, bringing the total number of projects under Phase 1 of the India Semiconductor Mission (ISM 1.0) to 12.

• The Milestone: This includes a proposal for India’s first commercial display fabrication unit (for mini/micro-LED screens).
• The Administrative Goal: To establish India in the global chip supply chain, drastically reduce electronics import bills, and secure critical defense and tech infrastructure.

2. The Chip-Making Process

To understand these projects, an administrator must know the stages of semiconductor manufacturing:

• Design: The conceptualization and architectural layout of the chip. (India already has a massive global talent pool doing this).
• Fabrication (Fabs): The actual printing of microcircuits onto silicon wafers. This is the most expensive and technologically complex stage.
• OSAT / ATMP: (Outsourced Semiconductor Assembly and Test / Assembly, Testing, Marking, and Packaging). The process of cutting the manufactured silicon wafers into individual chips, testing them, and packaging them into protective cases for electronics.
• Display Fabs: Specialized clean-rooms designed to create electronic screens (like LCD or OLED) by layering materials on glass bases.

3. Key Projects Across India (Regional Growth)

The 12 approved plants have attracted roughly ₹1.64 lakh crore in investments, spreading high-tech growth beyond traditional western hubs:

• Gujarat (The Crown Jewel): Tata Electronics Semiconductor Foundry in Dholera will be India’s first commercial-grade chip fabrication plant. Micron’s ATMP plant in Sanand was the first mover.
• Assam (Northeast’s Tech Leap): A massive ₹27,000 crore OSAT facility by Tata Electronics is being built in Jagiroad, putting the Northeast firmly on the advanced manufacturing map.
• Other States: Ancillary and OSAT projects are expanding into Uttar Pradesh, Odisha, Andhra Pradesh, and Punjab.

4. The Shift to ISM 2.0 (Mains Focus)

While ISM 1.0 successfully attracted foundational assembly plants, the upcoming ISM 2.0 will pivot the strategy to build a self-sustaining ecosystem:

• Focus on Ancillaries: ISM 2.0 will heavily support the industries required to keep fabs running—such as manufacturers of ultra-pure gases, specialized chemicals, and capital equipment.
• Recalibrating Subsidies: The government may reduce the heavy 50% capital subsidy currently given for basic assembly (ATMP) to redirect funds toward raw materials and equipment manufacturing.
• Push for Indian IP: Tying financial incentives to companies that develop fully indigenous Indian intellectual property (IP) and chip designs.

5. Strategic Significance & Way Forward

• Strategic Autonomy: Semiconductors are the “new oil,” powering everything from household appliances to advanced fighter jets. Domestic production insulates India from global supply chain shocks and geopolitical weaponization.
• Import Substitution: Electronics form India’s second-largest import bill after petroleum. Domestic manufacturing will directly protect India’s Current Account Deficit (CAD).
• The Administrative Challenge: Approving plants is just step one. To rival global hubs like Taiwan, state governments must ensure an uninterrupted supply of highly stable power and massive volumes of ultra-pure water—the two most critical raw materials for a functioning fab.

UPSC Value Box

• India Semiconductor Mission (ISM): The nodal agency operating under the Ministry of Electronics and Information Technology (MeitY) that acts as a single-window clearance for all chip projects.
• DLI Scheme (Design Linked Incentive): A parallel government scheme that offers financial support and infrastructure specifically to domestic startups and companies focused on designing semiconductor circuits.