Fuelling India's Silicon Valley Aspirations India needs to reduce its import bills, for this we need to focus on the three pillars: technology, ecosystem and talent, says Akarsh K Hebbar, global managing director, Vedanta Semiconductors and Display

It took 40-plus years for the US and over 25 years for Taiwan to establish their Silicon Valley. How long will it take for India to fulfill its perspicacious intent? Anchored by strategic positioning, a commitment to digitalization and demographic advantages, India stands tall to achieve its Silicon Valley ambitions.

As global value chains reshuffle amidst a push for increased diversification, resilience and security, India has become an increasingly competitive global player in advanced technology industries: It aims to reach $300 billion worth of electronics manufacturing and $120 billion exports by FY 26, supported by the vision of a $1 trillion digital economy by 2025.

"What the West achieved over a period of four decades, India is close to imitating the numbers in a span of five years! At this acceleration rate we can see a massive steep curve in a way that is going to take over the global economy to make India the fifth country to have a Silicon Valley," said Akarsh Hebbar, global managing director, Vedanta Semiconductors and Display.

The country nurtures its objective to become the largest ecosystem for electronic manufacturing globally. The manufacture of semiconductor and display glass is dominated by a handful of countries globally – Vedanta believes that to achieve self-sufficiency in electronics manufacturing – the country needs to reduce its reliance on electronics imports. Last year in July, Foxconn and Vedanta group called off their joint venture that had plans to invest $19.5 billion to set up a manufacturing unit in Gujarat. However, Vedanta is still committed to its semiconductor aspirations: Chairman Anil Agarwal reiterated the company's willingness to set up a semiconductor manufacturing unit.

As India continues to develop its urban centers and promote a Silicon Valley spirit of entrepreneurship, it is poised to be in a prime position to achieve global tech hub status. India retained 40th rank out of 132 economies in the Global Innovation Index 2023 rankings published by the World Intellectual Property Organization (WIPO).

The global backstory & where are we now?

The term Silicon Valley was coined by journalist Don Hoefler in a 1971 article for the trade magazine Electronic News. Soon after, Silicon Valley became the accepted name for the Santa Clara Valley area. The transformation of the valley began in the 1960s with the establishment of the first semiconductor company, which led to a lot more technology companies coming up and later transforming the region into an epicenter of technological innovation.

"Silicon Valley's journey to becoming a global innovation hub has not been straightforward. It has involved substantial investments, a high startup churn rate and a continuous commitment to consumer satisfaction and innovation from semiconductors to personal computers, from computer software to Internet-based businesses, innovation and technological evolution," Hebbar explained.

The India Cellular and Electronics Association (ICEA) projects that the Indian electronic manufacturing sector will reach $115 billion in 2024. Will it be safe to assume that creating an electronic manufacturing hub in India will have accelerated outcomes? "It is imperative not to remain passive for the forecasted growth of $300 billion in FY 25 and FY 26 because all of this is going to be imported. Our import bill is going to be this much and we need to start manufacturing indigenous products in India. There is a pressing need to establish India's own robust ecosystem enhancing local domestic value addition to accelerate and capitalize on the projected growth that we're envisaging for the success of India's own Silicon Valley," he added.

Explaining the phenomenon further, he shared: For instance, If we look at Paju in Korea, the LG city, it hosts up to 80 companies and 50,000 individuals working there. LG Display stands out by exporting 90 per cent of its products outside of Paju, becoming a hub for substantial contribution by a single company!

The need of the hour

KPMG estimates that development and adoption of cutting edge technologies such as 6G, 5G, satellite communications, semiconductors, etc have the potential to collectively add $240 billion into India's economy in the next five years. We have 20 per cent of the world's population right now consuming electronics in India. Therefore, tech companies are keen on localizing and bringing tried and tested technologies to build affordable electronics for the masses. To support this, India needs specific R&D Centers which will sustain a healthy growth of intellectual property and facilitate mastering the art of operational efficiency and process knowhow in production grade technologies.

India needs to be seen as a viable option for global tech companies to locate their factories. The government of India has identified this opportunity and laid out the subsidy of 50 per cent of cap expense for large high tech manufacturing industries such as semiconductor and display – Why is that? – "We import a hundred percent of these goods, we are currently $10 billion in display panel imports becoming $60 billion in 2025. We are expected to triple this by 2030; in the case of semiconductors, we import $25 to $30 billion, which is going to become $110 billion by 2030. This is massive!" the global MD explained, adding that with the government support to local manufacturing, we will get value up to 30 per cent in semiconductor manufacturing and around 20 to 60 per cent in display.

With the introduction of these large manufacturing facilities, we will have about $80 billion worth of ecosystem players co-locating or locating in India, "Global companies will not come to India with the vision and mindset to cater just one factory. The government of India is envisioning multiple fabs to reach economies of scale for this ecosystem. Indian consumption alone can accommodate 10 to 12 display fabs and eight to 10 semiconductor foundry fabs. We are going to need specialty chemicals, gasses, special ICs and design companies providing software services to these manufacturing companies, which will further attract a hundred plus Indian MSMEs to build startups around this ecosystem," he said.

Addressing existing challenges and capitalizing on its strength, India has the potential to make Silicon Valley a reality. Becoming a global leader not just in design but also in shaping the future of technology through its unique brand of innovation and manufacturing progress. Developments have been happening in pockets: In 2016, the Indian government launched the startup India initiative to support entrepreneurs and build a robust startup environment. Make in India, was designed by the government to promote self-reliance, enhance skill development and build a best-in-class manufacturing infrastructure.