 "Vantage | Why becoming a chip power is India's strategic necessity")
On Wednesday, Prime Minister Narendra Modi participated in a special event called India’s Techade.
Techade is basically a combination of tech and decade. India wants to use chips to power its economic growth. Wednesday’s event marked a big step in that journey. The prime minister laid the foundation stone for three chip projects.
The first is in Gujarat. It is a chip fabrication plant set up by the Tata Group with total investments of around 10 billion dollars. This will be India’s first chip fabrication plant.
The second project is in Assam—again, being set up by the Tata Group—with total investments of around 3.2 billion dollars. This facility will assemble chips.
Finally, the third project is located in the city of Sanand, Gujarat, and is being set up by CG Power and Industrial Solutions. Total investment is around one billion dollars.
Put together, these three projects are worth some 15 billion dollars, but the government is just getting started. PM Modi says India will soon become a chip power. It’s not just a vision but a strategic necessity. This is because chips are the building blocks of modern life. So you can’t depend on others for it; if you do, you will be at their mercy, as we have seen this happen before.
Just consider the social media revolution of the last two decades. American firms dominated that period, and Indian firms were nowhere in the picture. India had no answer to WhatsApp, Instagram, or Twitter, and as a result, these companies sidestepped Indian regulations. They do little to fight fake news, yet they milk the Indian market.
Impact Shorts
More ShortsSome Asian challengers did emerge, the biggest being TikTok, created by a company based in China. Tiktok managed to challenge and beat American tech firms. But look at it now: the US is on the verge of banning it, and India has already banned it. Other Western countries have partially banned it.
Now, TikTok isn’t exactly innocent here, but you get the drift. The US and its social media firms have fiercely guarded the industry. They won’t let others succeed. That is why sovereign platforms are so important.
It is what the Indian government is aiming for. PM Modi also hinted at this when he said that India missed the bus during the previous industrial revolutions and a repeat must be avoided.
As always, there are challenges and advantages.
India doesn’t have a geopolitical stigma, but China does. Western powers see China as a revisionist country—as a strategic rival—but they see India as a partner. So Western powers are helping New Delhi create new supply chains. One such deal was signed last year, called the Indo-Pacific Economic Framework.
India, the US, and 12 others agreed to diversify supply chains.
Next is skilled labour; 68 percent of India’s population is of working age; that’s around 900 million people.
The chip industry can be divided into three parts: designing, manufacturing, and assembling. If you want the big money, you must design, and that’s the most skilled part of this industry. Most of it is done in the US by companies like Intel and Nvidia. They are now worth billions of dollars.
Manufacturing a chip brings in less money, and assembling it even less.
If you want to be self-reliant, you need all three, and as of now, India isn’t there. It is mostly focused on manufacturing and assembly. It will take time and investment. The good news is that the government is thinking in the right direction.
At the same time, we need to keep an eye on the horizon because technology won’t end with chips. There will be more advanced products and industries. We need to identify and invest in them, or else we will be stuck in catch-up mode.
Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.
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