​Promise of chips: On the India Semiconductor Mission phase II

The second phase of the India Semiconductor Mission’s outlay far outpaces the first, with a ₹1.27 lakh crore corpus directing the government’s purse on a wide range of the electronics manufacturing ecosystem. As with the first phase, the outlay is likely to be spent lavishly on select individual projects in the form of a capital subsidy (with the government shelling out a smaller share than last time’s 50%), and manufacturing-linked incentives disbursed at a per-unit level once sales are done. Incremental incentive boosters have been promised for products that leverage domestic capabilities and components. The second phase promises to take forward the government’s goals to make India a strategic destination for the electronics value chain, and to grow such capabilities at home in human capital and intellectual property where select countries dominate different parts. The government has long held that this will be a decades-long project, and its follow-through with a larger corpus is welcome. This industry may not become a massive employer, but in a geopolitically fraught environment, the wisdom of spending public money in these capabilities is clearer. Much of the returns on the initial chipmaking bet remains unknowable as most facilities and projects approved in the first phase are yet to begin commercial production.