Information technology, electronics and semiconductors

Detail

1. What the IT and electronics industry makes

• The information technology (IT) and electronics industry makes electronic goods and computer software, and provides the services that run on them.
• Range of products (NCERT):
• Consumer goods: transistor sets and television sets.
• Communication equipment: telephones, cellular telecom equipment and telephone exchanges.

• Strategic and high-end goods: radars and computers.

• Semiconductors (materials such as silicon whose ability to carry electricity can be controlled) are made into chips (tiny circuits on a piece of silicon). Chips are the base input for every product above.

• Semiconductors power computers, mobile phones, telecom networks, cars, defence systems and artificial intelligence [2].
• India uses nearly 20% of the world's microprocessor output (microprocessor: the "brain" chip of a computer) (as of 2026) [2].

2. Distribution: where the industry is found

• Bengaluru (Karnataka, about 13°N) is the "electronic capital of India".
• Other centres (NCERT): Mumbai, Delhi, Hyderabad, Pune, Chennai, Kolkata, Lucknow and Coimbatore.
• Main concentration: Bengaluru, Noida, Mumbai, Chennai, Hyderabad and Pune. NCERT's map of Software Technology Parks shows these six cities.

• Software Technology Park (STP): a zone with ready office space, high-speed data links and single-window clearance for software exporters.

• Spatial pattern:

• The industry is concentrated in the southern and western metros (Bengaluru, Hyderabad, Chennai, Pune, Mumbai) and in the National Capital Region (Noida, Delhi).
• The east (Kolkata) and the north-central plains (Lucknow) have only small shares.

Cluster	State	Main strength
Bengaluru	Karnataka	"Electronic capital"; software, chip design, electronics assembly
Noida	Uttar Pradesh (NCR)	Software parks; mobile phone assembly
Chennai–Sriperumbudur	Tamil Nadu	Software; electronics and phone assembly
Hosur	Tamil Nadu (close to Bengaluru)	Electronics and phone assembly
Hyderabad	Telangana	Software services
Pune, Mumbai	Maharashtra	Software services

3. Why it matters: jobs and foreign exchange

• The biggest gain is employment. The industry gives jobs to large numbers of educated young people.
• Software exports earn foreign exchange (money in foreign currencies such as the US dollar).
• Smartphones were India's top export product by value in calendar year 2025 [4][5].

4. Location logic: a footloose, high-tech industry

• Footloose industry (NCERT Class 12): an industry that can be set up almost anywhere, because it does not depend on one bulky or perishable raw material. Its inputs, such as chips and code, are light and can move easily.
• Its products are small and high in value, so transport costs matter very little.

• It causes little pollution and does not need large amounts of raw material.

• High-technology industry: an industry that uses a lot of research and development (R&D) and employs mostly professional, white-collar workers rather than manual workers.

• These industries collect in neat, low-rise campuses called technopoles or technology parks.

• Silicon Valley (California, USA) is the classic world example.

• Factors that decide location:

• Skilled graduates. Engineering colleges and research institutes in Bengaluru, Hyderabad, Chennai and Pune supply them.
• Sites on the edges of metros. Peripheral land (for example Whitefield in Bengaluru, Noida next to Delhi, and Hinjewadi in Pune) is cheaper and less crowded. These sites still give access to city services and airports.
• Good connectivity. International airports, reliable telecom links and high-speed data networks are needed.
• Early state support. STPI (Software Technology Parks of India, set up in 1991 under the electronics ministry) gave software exporters satellite data links, tax benefits and quick clearances.

5. Electronics manufacturing hubs (mobile phones)

• India is the world's second-largest mobile phone maker (after China) [4][5].

• In about 11 years (to 2025), India changed from a net importer to a net exporter of mobile phones [4].

• The growth in numbers:

Indicator	FY 2019-20	FY 2024-25
Mobile phone production	₹2.14 lakh crore	₹5.5 lakh crore [4][5]
Mobile phone exports	₹0.27 lakh crore	₹2 lakh crore (about 8 times) [4][5]

• More than 300 mobile manufacturing units were running in India in 2025 [4][5].
• PLI (Production Linked Incentive) scheme: the government pays companies a reward linked to how much extra they produce and sell in India.

• The PLI for Large Scale Electronics Manufacturing started in 2020 to raise mobile phone making at home [4][5].

• Assembly clusters:

• Noida (Uttar Pradesh)
• Sriperumbudur and Hosur (Tamil Nadu)
• Bengaluru (Karnataka)

• Rising iPhone exports come mainly from the Tamil Nadu and Karnataka units.

• Why these clusters grew:

• They are close to big consumer markets (NCR) or to ports (Chennai).
• Earlier automobile and electronics firms had already built supplier networks there.
• State governments offered land and single-window clearances.

6. India Semiconductor Mission (ISM)

• ISM 1.0 was approved by the Union Cabinet in December 2021, with an incentive package of ₹76,000 crore [2].

• It gives up to 50% fiscal support (help from the government's budget) for silicon fabs, compound semiconductor units, assembly and testing units, and chip design [2].

• Key terms:

• Fab (wafer fabrication unit): a factory that prints circuits onto thin silicon discs called wafers. This is the hardest and most costly step in chip making.
• OSAT / ATMP (Outsourced Semiconductor Assembly and Test / Assembly, Testing, Marking and Packaging): units that cut finished wafers into chips, pack them and test them.
• Compound semiconductor: a chip made of two or more elements, such as silicon carbide (SiC). It is used in power electronics and electric vehicles.

• Design Linked Incentive (DLI) scheme: an outlay of ₹1,000 crore for chip design start-ups and MSMEs. It gives up to ₹15 crore per company [2].

• Progress: by December 2025, 10 projects worth ₹1.60 lakh crore had been approved across 6 states [2].

• In 2026 the Cabinet approved two more units with a combined investment of over ₹3,900 crore [6].

• ISM 2.0: announced in the Union Budget 2026-27 with ₹1,000 crore for FY 2026-27. It focuses on making semiconductor equipment and materials in India, and on Indian chip designs (intellectual property) [2].

Approved units (as of December 2025)

#	Company (partner)	Location	Type	Investment	Capacity
1	Micron Technology (USA)	Sanand, Gujarat	Assembly and test of DRAM and NAND memory chips	₹22,516 crore	about 14 million units per week [2]
2	Tata Electronics + PSMC (Taiwan)	Dholera, Gujarat	India's first commercial silicon fab	₹91,526 crore	about 50,000 wafer starts per month [2]
3	Tata Electronics	Jagiroad (Morigaon district), Assam	OSAT using Indian packaging technology	₹27,120 crore	48 million units per day [2]
4	CG Power (Renesas, USA; Stars Microelectronics, Thailand)	Sanand, Gujarat	OSAT	₹7,584 crore	— [2]
5	Kaynes Technology	Sanand, Gujarat	OSAT	₹3,307 crore	more than 6.33 million chips per day [2]
6	Vama Sundari Investments	Uttar Pradesh	Chip unit	₹3,706 crore	about 20,000 wafers or 36 million chips per month [2]
7	3D Glass Solutions (USA)	Info Valley, Bhubaneswar, Odisha	Advanced packaging and glass substrates	₹1,943 crore	about 5,800 panels per month [2][3]
8	SiCSem (Clas-SiC, UK)	Info Valley, Bhubaneswar, Odisha	India's first commercial compound (SiC) fab	₹2,066 crore	5,000 wafers per month [2][3]
9	CDIL	Mohali, Punjab	Expansion: high-power discrete devices (MOSFETs, IGBTs)	₹117 crore	about 158 million units per year [2][3]
10	ASIP (APACT, South Korea)	Andhra Pradesh	Packaging	₹480 crore	96 million units per year [2][3]

• Distribution by state: Gujarat has 4 of the 10 units (Sanand ×3, Dholera ×1). Odisha has 2. Assam, Uttar Pradesh, Punjab and Andhra Pradesh have one each [2].
• The four units in Odisha, Punjab and Andhra Pradesh together are worth about ₹4,600 crore and will employ about 2,034 skilled workers [3].
• The groundbreaking (start of construction) of India's first advanced 3D semiconductor packaging unit, in Odisha, has taken place [7].

7. Why chip plants are hard to locate

• A fab needs four things in large and steady supply:
• Reliable water: large volumes of ultra-pure water (water with almost all minerals removed) to wash the wafers.
• Uninterrupted power: even a few seconds of power cut can spoil a whole batch of wafers.
• Ultra-pure chemicals and gases: most of these are imported, so ports nearby help.

• Skilled engineers: India's answer is large training programmes. For example, the SMART Lab at NIELIT Calicut aims to train 1 lakh engineers, and more than 62,000 had been trained by early 2026 [2].

• Why Gujarat was chosen:

• Land: large, flat plots in the Dholera Special Investment Region, on the Gulf of Khambhat.
• Policy: a state semiconductor policy and quick clearances.
• Ports: western coast ports bring in imported chemicals and equipment and ship out finished goods.

• Existing base: the Sanand auto cluster near Ahmedabad.

• Why Assam was chosen:

• It gives the eastern location close to markets in the North-East, South-East Asia and East Asia, which fits the Act East policy.

• Jagiroad is India's first semiconductor unit in the North-East.

• The global picture:

• Chip making is concentrated in Taiwan, South Korea, Japan, China and the USA [2].
• Taiwan alone makes over 60% of the world's semiconductors and nearly 90% of the most advanced chips [2].

• During COVID-19, chip shortages hit more than 169 industries worldwide [2]. This is why India wants its own supply.

• Market size: India's semiconductor market was about US$38 billion in 2023 and US$45–50 billion in 2024-25. It is expected to reach US$100–110 billion by 2030 [2].

Prelims Hooks

• Bengaluru = "electronic capital of India" (NCERT).
• STPI was set up in 1991. NCERT's Software Technology Park map highlights Bengaluru, Noida, Mumbai, Chennai, Hyderabad and Pune.
• IT is a footloose, high-tech industry. Its location depends on skilled labour and connectivity, not on raw materials.
• India is the world's 2nd-largest mobile phone maker. Smartphones were India's top export by value in CY 2025 [4].
• PLI for Large Scale Electronics Manufacturing was launched in 2020 [5].
• ISM: approved in December 2021, with ₹76,000 crore and up to 50% fiscal support [2].
• Unit–place matches:
• Micron → Sanand (Gujarat)
• Tata–PSMC fab → Dholera (Gujarat)
• Tata OSAT → Jagiroad (Assam)
• SiCSem and 3D Glass → Info Valley, Bhubaneswar (Odisha)

• CDIL → Mohali (Punjab)

• India's first commercial silicon fab is in Dholera. India's first commercial compound (SiC) fab is SiCSem in Odisha [2][3].

• Trap: Micron's Sanand plant is an assembly and test unit, not a fab.
• ISM 2.0 was announced in Union Budget 2026-27 with ₹1,000 crore for FY 2026-27 [2].

Mains Points

• Uneven distribution:
• IT and electronics are concentrated in southern and western metros and the NCR, because these places have skilled graduates, airports and early STPI parks.

• This widens regional gaps. Spreading units to Assam, Odisha, Punjab and Andhra Pradesh under ISM is a partial correction [2][3].

• From assembly to value addition:

• PLI made India the 2nd-largest phone maker, and phone exports grew about 8 times between FY20 and FY25 [4][5].

• But much of the value still comes from imported chips. Fabs and OSAT units (Dholera, Sanand, Jagiroad) are needed to deepen the supply chain.

• Locating fabs is a resource problem (GS-III):

• Fabs need ultra-pure water, steady power, imported chemicals and skilled engineers.

• Gujarat was chosen for land, policy and ports. Water stress and grid reliability remain risks in semi-arid regions.

• Strategic angle:

• Taiwan's dominance (over 60% of chips) and the COVID-19 shortage, which hit more than 169 industries, show the risk of depending on a few suppliers [2].
• ISM, the DLI scheme and talent programmes aim to make India part of a more secure global supply chain [2].