The global semiconductor industry, with a staggering market size nearing a trillion dollars, is not merely about chips; it is the fundamental engine of the modern economy. It powers everything from our smartphones and electric vehicles to critical defense systems and artificial intelligence. For India, the quest for a foothold in this strategic domain is not new. It’s a journey that began over four decades ago, a story of ambition and a spectacular failure that, in hindsight, serves as both a cautionary tale and an illuminating lesson. Examining what might have been had the India Semiconductor Mission of the 1970s and 80s succeeded is not an exercise in historical lamentation but a crucial tool for understanding the stakes of the current, renewed push.
Had India’s semiconductor ambition been realised in the 1970s and 80s, the economic trajectory of the nation would be unrecognizable today. This was the era when countries like Taiwan and South Korea, with similar developmental stages, laid the foundations for their technological dominance.
A successful, globally integrated Semiconductor Complex Limited (SCL) in Mohali would have been a catalyst for a profound economic transformation. The multiplier effect of a thriving semiconductor industry is immense; academic studies from organisations like UNIDO suggest that for every direct job created in high-tech manufacturing, multiple indirect jobs are generated in ancillary industries, from raw material suppliers to specialized service providers.
Let us envision this counterfactual history. By the late 1980s, India could have been a key hub for chip manufacturing, not just design. This would have led to a virtuous cycle of investment. Foreign Direct Investment, deterred by the bureaucratic hurdles and protectionist policies of the time, would have flowed in.
The SCL, instead of being a state-owned enterprise with limited technological reach, could have become a nexus for collaboration with global giants like Fairchild Semiconductor, which at one point showed interest but was stymied by red tape. The tragic fire at SCL in 1989, a symbolic end to the first mission, would have been a minor setback in a robust and diversified ecosystem.
The impact on India’s economy would have been both deep and widespread. For starters, it would have fundamentally altered our trade balance. Furthermore, a mature semiconductor ecosystem would have provided a massive fillip to other key industries. The automotive sector, for example, would have a local supply of chips for everything from engine management to advanced driver-assistance systems (ADAS), accelerating the adoption of electric vehicles.
The nascent defense and aerospace industries would have had access to secure, indigenous chips for avionics and missile systems, enhancing our strategic autonomy. The IT hardware sector would have boomed, with ‘Made in India’ laptops, servers, and consumer electronics becoming a reality much earlier. The country would have leapfrogged its way into the Fourth Industrial Revolution.
So, what went wrong in the 1970s and 80s? The failure can be attributed to a confluence of factors. First, a myopic vision centered on self-reliance through import substitution, which created a technologically isolated and inefficient industry. Second, crippling bureaucracy and a lack of sustained government support, including promised subsidies on electricity and other resources, which made long-term planning impossible for private and foreign players. Finally, the tragic SCL fire, while a physical event, was a symptom of a deeper malaise—a lack of redundancy and a fragile, single-point-of-failure approach.
Prime Minister Narendra Modi’s mention of the semiconductor mission from the ramparts of the Red Fort is a clear signal that the government understands the magnitude of the past failure and the criticality of the current mission. The India Semiconductor Mission (ISM), launched in 2021 with a massive outlay of INR 76,000 crore (approximately $10 billion), is a deliberate and pragmatic course correction. The lessons of the past have been meticulously applied.
The current mission is fundamentally different. Instead of state-led isolationism, it promotes global collaboration, offering fiscal incentives of up to 50% of the project cost to attract the world’s leading semiconductor manufacturers. The focus is not just on chip fabrication (fabs) but on the entire value chain, including display fabs, outsourced semiconductor assembly and test (OSAT), and design-linked incentives (DLI). This multi-pronged approach leverages India’s existing strength in chip design while systematically building capabilities in manufacturing and packaging.
Recent successes, such as Micron’s project in Gujarat, the Tata Group’s ventures, and the approvals for projects by CG Power and HCL-Foxconn, are not just isolated events; they are tangible signs of a paradigm shift. However, a world-class academic perspective demands an acknowledgement of the formidable challenges that lie ahead. The industry is hyper-capital-intensive, with a single fab costing billions of dollars. The talent pool for specialized manufacturing roles is still nascent and needs to be scaled rapidly. The infrastructure requirements, particularly uninterrupted power and an abundance of ultra-pure water, are immense and unforgiving. Geopolitical risks and a global race for technological supremacy add another layer of complexity.
In conclusion, India’s semiconductor mission is not merely a gamble; it is a necessity and, more profoundly, a strategic masterstroke. The story of its failure in the 1970s serves as a stark reminder of the cost of missed opportunities. What we are witnessing today is not just an industry being built, but a wrong being righted. The success of this mission will not only unlock a trillion-dollar industry for India but will also catalyze the growth of numerous other sectors, from electric vehicles and consumer electronics to defense and telecommunications.
By creating a domestic hardware ecosystem, India will be better insulated from global supply chain shocks and geopolitical tariff crises, transforming vulnerability into a key competitive advantage. The success of this game-changing policy will be the final chapter in a story of a nation’s technological reckoning, finally putting it on a path towards genuine strategic autonomy and global economic leadership.
(The Author is faculty member at Langat Singh College in Muzaffarpur, specializes in electronics and computers and maintains a keen interest in India’s semiconductor sector. Email: [email protected])
