ashwini vaishnaw: Chips are like oil, India will need at least 10 fab units, says Ashwini Vaishnaw

India will need at least 10 semiconductor fabrication units in the coming years and the government is ready to invest in several more projects, said Minister of Electronics and IT Ashwini Vaishnaw. Chips are like “oil” and are important for both strategic and commercial reasons, Vaishnaw told ET’s Surabhi Agarwal in an interview. India cannot always keep importing chips, he said, expressing disappointment over comments by former RBI governor Raghuram Rajan that the country should not get into chip manufacturing. Edited excerpts:

The government has already received about five proposals to set up fabs. The ministry is also reaching out larger companies like Intel, TSMC and Samsung. Are you sending out mixed signals to applicants?

There is not even an iota of doubt over the seriousness of both these applicants as well as the government. The final evaluation will begin soon. The pre-evaluation has already progressed well. So, there are absolutely no mixed signals. This $10-billion package is the first tranche of our move into the semiconductor field. It’s a roadmap for 20 years. After the first tranche is closed, we will definitely go forward. We have an appetite for more. The industry still looks at India as a market where many more fabs could be needed. So, it’s an understanding between us and the industry.

Will the government go ahead with existing proposals or wait for large companies?

These are serious guys. Innolux – which has partnered with Vedanta in display – is the world’s best. Between LG and Innolux, the entire technology is with these two companies in display. Who’s a bigger consumer of chips than Foxconn? The guy who’s hungry. So, these are very serious applications. The country will need at least 10 fabs. I’m not saying that we want to do 10 fabs. We have to leave a country behind that is resilient and strong. This is the future. If we don’t build the foundation today, 20 years down the line, people will blame us.

The Russia-Ukraine conflict has raised questions on the globalized world order. Is there a stronger case now for Atmanirbhar Bharat?

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We in the government don’t see it from a sanctions point of view. We see Atmanirbhar Bharat (self-reliant India) as a movement to make ourselves very strong – build, manufacture, design for ourselves and design for the world. As prime minister (Narendra Modi) said in Davos: Make in India, make for the world.

How will you take it forward?

We’re doing right at each step, whether it is electronics manufacturing, having our own 4G suite, entire technology stack… we are going to launch it very soon. Last Cabinet (meeting), the PM approved it. Whether it is getting the 5G technology stack bolted on to 4G as the next step, semiconductor, some critical materials like permanent magnets, defence manufacturing, or whether it is railway – our Vande Bharat story – (we are) truly talking to the world.

Industry is desperately seeking clarity on the Data Protection Bill.

Very good clarity will come, very soon. The outcome will be good.

Raghuram Rajan said recently that India should not get into chip manufacturing, but create more talent at universities, which is its strength. What are the economics of chip manufacturing?

What is the investment in universities today? What was the investment in universities 15 years ago? I can have an open debate on every point. He says we should focus more on services, right? We have $150 billion services export already which is growing at a 15% CAGR. Domestic services always come after the manufacturing cycle has happened. Country after country has been doing this. Someone of his eminence saying this makes me disappointed.

How does India gain by having its own chip manufacturing facilities?

We’ll have 8.5 million people employed in electronics manufacturing… We cannot carve out semiconductor industry into just strategic purposes or commercial gains. Today, it’s like oil. If you don’t have diesel and petrol, can we run an economy? If we don’t have a power plant, can we run an economy? It’s a basic ingredient of today in a digital economy. If you don’t have semiconductors, how will you survive?

Won’t importing chips be cheaper?

We can import, but are imports a sustainable thing? Would you like to import oil all your life? Wouldn’t you like to diversify your energy supply? Wouldn’t you like to generate your own power? Take the case of Singapore in its initial phase. They were importing power from Malaysia. How much of an issue was that? Can somebody not turn off (the power)? This is the fundamental building block of any economy, whether it’s a strategic sector, commercial sector, our aspirations, whether it is the need of the last person in society to have a good quality handset, at an affordable price, right?

What is your vision for the next phase of electronics manufacturing?

First and foremost, we definitely need to deepen the supply chain, which is what we are doing right now. So, for example, mobile manufacturing or let’s say the iPad, or some of the other two items, we have to go to the component level. Our focus is on deepening. Second, we have achieved good success in five, six sectors. Now we need to move on to at least seven or eight more sectors, because now the global supply chain has got confidence on our ability to execute. Third, simultaneously we need to continue to build on talent. As this industry progresses, we have to make sure that we work into the mass production as well as the design side of it.

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