The Ministry of Electronics and Information Technology (Meity) will write to the Ministry of Finance, flagging the semiconductor industry's concerns regarding delays in clearing shipments of precision tools, raw materials, speciality chemicals, and gases needed to run chipmaking and packaging units. According to sources reported by Business Standard, this intervention comes as the industry faces operational challenges at customs checkpoints. The initiative reflects broader government concerns about supply chain bottlenecks affecting critical industries. A senior government official confirmed that some shipments have been held back for weeks due to minor procedural issues such as incorrect HSN (Harmonized System of Nomenclature) codes and incorrect tagging of tools or raw materials being imported. As per Zee News, India's semiconductor ecosystem is likely to move through project commissioning, customer qualification and yield stabilisation over the next three to five years, with localisation of recurring inputs and higher-value packaging expected to follow.
Some industry participants have flagged a couple of cases where Customs officials at the port of entry insisted that the packaging of precision tools and raw materials be opened, as reported by Business Standard. These specific incidents highlight the operational challenges facing semiconductor companies in their supply chain operations. The industry concerns center around the delays in clearing essential materials for chip manufacturing operations, with companies reporting difficulties in obtaining necessary clearances for critical shipments. A second official confirmed that apart from incorrect HSN codes and tagging, some industry participants have also flagged cases where Customs officials at the port of entry insisted that the packaging of precision tools and raw materials be opened.
Beyond writing to the finance ministry about delays in Customs clearances for semiconductor industry products, the IT ministry is also likely to check for the possibility of a 'customs green channel' for these precision tools and raw materials so that import time is reduced to the minimum possible period. As reported by Business Standard, a third official explained that this was requested by some countries in their respective roundtable meetings with the IT ministry. For a green channel to be established, there are several processes and procedures that must be followed. The official noted that we will write to the finance ministry and see what can be done regarding this initiative. As per 360 ONE Capital, near-term earnings opportunities are likely to emerge across construction, utilities, electronics manufacturing, components, engineering, automation and equipment support before direct fab and OSAT economics become more visible.
A report released by the government think tank NITI Aayog in May this year projected that India's semiconductor demand, currently hovering around $37 billion, is likely to reach $206 billion over the next 10 years by financial year 2034-35. The report estimated that demand growth will be driven primarily by a surge in the need for high-performance, quantum, and edge use-case computing. Currently, India imports nearly 95 per cent of the semiconductor chips it needs each year, with the total value of these imports at nearly $30.3 billion in financial year 2024-25 (FY25). The NITI Aayog report estimated that India's imports of semiconductor products grew at a CAGR (compound annual growth rate) of 23 per cent between FY17 and FY25, and if this pace persists, the annual import cost could increase to $240 billion by 2035. According to Zee News, the brokerage said near-term earnings opportunities are likely to emerge across construction, utilities, electronics manufacturing, components, engineering, automation and equipment support before direct fab and OSAT economics become more visible.
