In view of global supply disruptions with regard to semiconductors, finance minister Nirmala Sithraman held a meeting with representatives of the U.S. semiconductor industry in San Francisco. The finance minister spoke about how the government is making efforts to ensure India becomes a reliable partner in the global supply chain with dedicated incentives to companies making investments.

"FM spoke of the opportunities for companies situated in Silicon Valley for the entire semiconductor value chain and Government of India’s commitment to be a reliable player in the entire value chain with a dedicated incentive for the sector in Mission Mode through Indian Semiconductor Mission," the finance ministry tweets.

The industry leaders who took part in the meet assured her they have scaled their capabilities in India in the last few years. "The participants also mentioned that in view of global supply chain disruptions, they need to review overreliance of the supply chain in certain jurisdictions and with the right policies and talent in place, next decade will belong to India," says the ministry.

In December last year, the government approved a comprehensive programme worth ₹76,000 crore to develop a sustainable semiconductor and display ecosystem in the country. This is a part of the Centre's commitment worth ₹2,30,000 crore to position India as a global hub for electronics manufacturing.

As per the finance ministry, investments have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors or silicon photonics or sensors (including MEMS) fabs, semiconductor packaging and semiconductor design. The programme will provide a globally competitive incentive package to companies in semiconductors, display manufacturing and design space.

Besides this, finance minister Nirmala Sitharaman also attended a roundtable meeting with senior executives, private sector business leaders, venture capitalists, institutional investors, and representatives of pension and endowment funds, representing combined assets under management of over $1 trillion. The FM invited them to participate in India's growth story, which she said would remain the fastest growing economy in the next years.

Why semiconductors are important?

Semiconductor chips, also known as microchips or integrated circuits, are extensively used in almost every industry. In view of the limited supply and issues that emerged after the Covid pandemic, many countries, including India, are facing chip shortages.

Not to mention a huge demand for electronic items as people adjusted to remote work culture. A chip consists of several components, transistors and complex wiring. They act as little brains in electronic items used in the modern-day world. Right now, India imports most of its chips.

This is because semiconductors and display manufacturing is a complex and tech-intensive sector, which involves huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology. However, with India’s new policy, the country could soon emerge as a key player in the semiconductor industry.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.