India's semiconductor industry faces a fundamental challenge in achieving domestic manufacturing independence. According to reports from Business Standard, semiconductor production requires more than 50 ultra-high-purity industrial gases, making them vital prerequisites for chipmaking. However, India is yet to scale its domestic industry to meet these requirements, creating a significant supply chain dependency on imports. This geographical concentration creates supply risks during geopolitical tensions, industrial disruptions and other international crises, as highlighted in recent UPSC current affairs reports.
As reported by Business Standard, INOX Air Products currently manufactures about 12 ultra-high purity specialty gases and is adding 10 more to the portfolio. Despite this expansion, approximately 25 gases will rely solely on imports for their introduction into the supply chain. Diganta Kumar Sarma, head of strategy and business development at INOX Air Products, emphasized that "You can't keep on importing gases and chemicals into India if you really wanted to have a locally made chip that meets all equipment, all materials made in India."
According to reports from Business Standard, India's semiconductor industry is projected to surpass $100 billion by 2030. The country hopes to achieve the capability to design and manufacture chips required for nearly 70-75 per cent of domestic applications by 2029. However, the current lack of domestic manufacturing capabilities for these critical gases poses a significant barrier to achieving this ambitious target. The global semiconductor market grew at a compound annual growth rate of 6.5% between 2014 and 2024, and is projected to grow at approximately 8.5% over the next five to ten years, as reported by UPSC current affairs.
As reported by Business Standard, these ultra-high purity gases require investment in the back end to build capability for purification, capability for analysis, and readiness for audits. Additionally, safety considerations are critical as many of these gases are toxic, flammable, and corrosive in nature. Industry experts emphasize the need for industry-wide partnerships and actual long-term contracts to build sustainable domestic capabilities. The semiconductor manufacturing process involves hundreds of controlled operations inside fabrication plants, with completed wafers carrying around 40-50 printed layers on discs approximately as thick as the tip of a pen.
According to reports from Business Standard, under Semicon 2.0, approved by the Cabinet in July, companies involved in the manufacturing and research and development of materials, chemicals and gases essential for semiconductors are to be incentivised. This policy framework aims to address the current supply chain challenges and support the development of domestic manufacturing capabilities for critical semiconductor materials and gases. The programme seeks to expand India's capabilities beyond fabs and packaging by developing all major parts of the chip value chain, including development of strategic and commercial chips for Indian and international markets.
