HTLS Day 1: Ashwini Vaishnaw explains PM Narendra Modi's 20-year semiconductor plan

New Delhi: India will become a major semiconductor designing and manufacturing hub over the next five years, Ashwini Vaishnaw, the union minister for railways, communications, electronics and information-technology, said on Day 1 of the Hindustan Times Leadership Summit on Tuesday.

"In another five years from now, India will be seen as a large and major semiconductor designing and manufacturing hub," he said in an interview with R.Sukumar, editor-in-chief, Hindustan Times.

Asked about India's future in the global semiconductor market, he said the Government of India has moved rapidly in this direction since the launch of the country's semiconductor policy.

"Semiconductors are a foundational industry, and we will become a major player in the semiconductor industry going forward. On January 1, 2022, our semiconductor policy was approved by our Prime Minister and was launched. Within a short frame of time, our first chip-manufacturing plant of Micron, one of the top five companies in the world, is getting constructed as we speak today. That's the rapid pace at which we have moved," he said.

Elaborating on the global semiconductor market, he said India has been trying to carve out its niche in an untapped area of the industry.

"The entire industry globally is worth about 650 billion dollars. It is going to double in the next six to seven years to more than a trillion dollars. The industry is evolving in a very interesting way. Four years ago, the smaller the nanometer, the better it (chip) was. Today, the industry has evolved in a different way because of the explosive growth of telecom across the world; rapid growth of electric vehicles; rapid growth of the use of semiconductors in domestic appliances. They have created a large segment called compound semiconductors, and the industry believes it will be around half the market. That market currently has no dominant player," he said.

"When we look at our strengths and capabilities, the biggest strength is design. The second strength we have is clean power, green power. The third strength is the ability to handle very complex liquids and chemicals. These are three large strengths which place us in a sweet spot, where we can become a player that is designing and manufacturing chips. There are players in the world that have only manufacturing capabilities but very little design capability. Some are very strong in design but have no manufacturing capability. We can do both. That is the direction we are moving in, and we have carved out a segment which is rapidly growing and will be half of the world's semiconductor demand," he added.

He said the country's semiconductor plan takes a "long-term view".

"It is a very difficult industry, because the technologies are rapidly changing, the prices follow a vicious cycle -- some times they are very high, some times they are very low. So we have to play very carefully... we have to take a long term view -- that's what our Prime Minister has guided us towards. His vision is to think of a plan for 20 years, not for four-five years," he said.

On IT manufacturing in India

The minister said the central government's policies completely transformed IT manufacturing in India.

"The biggest difference was a stable policy regime, a clearly defined incentive regime and a very clear focus on removing unnecessary compliances. And the results speak for themselves. Electronic manufacturing 10 years ago was a very small number, today it has crossed 100 billion dollars. Exports today in the sector are 23 billion dollars plus," he said.

He said most of the mobile phones sold in the country are made in India.

"So the Make In India programme Prime Minister Narendra Modi launched and consistently followed it up...one after the other, innovations were carried out in the entire system, simplification was done, that has laid the ground for very good mobile and electronic manufacturing (sectors in India). Today our exports in the mobile sector have crossed 11 billion dollars. Mobile manufacturing is worth 44 billion dollars. So this is a phenomenal thing," he added.

Asked about five things that make India's electronics-manufacturing sector competitive, he gave an elaborate answer comprising talent, low labour cost, infrastructure and a vibrant domestic market.

"First -- availability of design ecosystem, which is not there in many of the countries that are trying to compete," he said

"Second is very high quality talent... The third is the highly competitive cost of labour. Even if we scale up 20 times today, the cost of labour will remain competitive. The fourth point is the huge investment made in infrastructure, which is reducing the overall cost of doing business -- in terms of your shipping time, in terms of your internal logistics, in terms of the cost of power. All those costs are coming down," he said.

"The fifth and the foremost point is a very large domestic market. It gives the ability to companies to test out their products in a large market. In a sense, first conquer that market, be stable in that market and then start exporting," he added.

On telecom and 5G internet

Ashwini Vaishnaw said Prime Minister Narendra Modi's government completely turned around the telecom sector that had been "bleeding".

"Telecom is a great turnout story. Nine years back, if you spoke of telecom, the first thing that came to your mind is the scam... the industry was bleeding, there was continuous litigation, the scenario was such that nobody would like to touch the telecom sector. Today, telecom has become a sunrise industry. I read a recent report that hiring in the telecom sector is going on at 20 percent. That's the change that has happened in telecom," he said.

"If you look at it systematically, the first thing was to solve the spectrum issues. Through a major reform package, practically, all the major spectrum-related issues have been resolved. The second thing was to have a very rapid roll out of 5G; because we don't want to be left behind in this world, which is changing rapidly. I am very happy to share with you that today we are among the top 3 5G ecosystems in the world. Within 1 year, we are at 3,90,000 sites, which is more than the US, Europe," he added.

He said more than 80 percent of equipment used in the 5G rollout were made in India.

"A large part of design value is also made in India. And above all, a very big challenge our Prime Minister had thrown at us was that why can't we make our end-to-end telecom technology stack... the 4G-5G stack that we can tomorrow think of exporting. I am very happy to share with you, our 4G-5G stack has been developed, it has been tested, and now it is getting deployed. Around Diwali, our homegrown 4G-5G will be launched and by next Diwali, we will become exporters of this technology," he said.

On high-speed rail network

Ashwini Vaishnaw also elaborated on the central government's focus on developing high-speed railway corridors.

"We shouldn't look at rail networks as just infrastructure projects. A high-speed rail network basically creates a large economy. For instance, Tokyo to Osaka. When you move from Tokyo to Osaka, five cities become one large economy. It is not 1+1+1=3, it becomes 1+1+1=111. It is a multiplier effect. This effect needs to be seen at a conceptual level first," he said.

"So when we develop the Mumbai-Ahmedabad high speed corridor, and in future there will be many more such corridors, what we are doing in essence is we are connecting Mumbai, Thane, Vapi, Baroda, Ahmedabad, Surat, Anand -- all these large economies, which are very vibrant and rapidly growing, they all become one large economy. They all start reinforcing each other. All these centers start adding to each other. That's the power of a high-speed railway network. That's what we should look at when we explain why our Prime Minister has put so much focus on developing these technologies and new corridors," he added.