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Topic: Semiconductor Fabrication in India

Why in News: Concerns are raised over the under-utilization of funds in production-linked incentives (PLI) for semiconductor manufacturing in India, highlighting the need for clearer goals and effective utilization of resources.

Key Facts for Prelims:

The PLI scheme for IT hardware has an outlay of ₹17,000 crore, and for semiconductors and displays, it is ₹38,601 crore.

The focus is on increasing semiconductor fabrication capabilities in India.

There's an 80% under-utilization of allocated funds for semiconductor PLI.

Semiconductor manufacturing employs advanced automation, leading to relatively low direct employment compared to the value generated.

Analysis for Mains:

Strategic Importance: Semiconductor fabrication is crucial for India’s technological advancement and self-reliance.

Example: Dependency on foreign chips during the pandemic highlighted the need for domestic production.

Economic Impact: The PLI scheme is aimed at boosting the electronics manufacturing sector but shows limited success in attracting major investments.

Case Study: The underutilization of PLI funds and lack of substantial commitments from multinational chipmakers.

Policy Challenges: The need for a clear strategy in allocating resources amidst rapidly advancing technology like AI.

Policy Analysis: A focus on assembly and large manufacturing plants with heavy reliance on imported materials.

Goal Clarity: The necessity for the government to define tangible outcomes - whether it's cyber sovereignty, consumer benefits, or global manufacturing dominance.

Implication: This clarity can aid in recognizing failures and implementing timely course corrections.