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1、ITirINFORMATIONTECHNO1OGY&INNOVATIONFOUNDATIONInitia1FindingsofINDIASEMICONDUCTORREADINESSASSESSMENTREPORTABOUTTHEREPORTOnJanuary31,2023,IndiaandtheUnitedStatesannouncedthejointinitiativeonCritica1andEmergingTechno1ogy(iCET)zwhichcommittedthetwocountriestoexpandstrategictechno1ogypartnershipsanddefe
2、nseindustria1cooperationbetweentheirnationsbusinesses,academicinstitutions,andgovernmentagencies.AspartoftheiCETztheSemiconductorIndustryAssociationintheU.S.andIndiasIndiaE1ectronicsSemiconductorAssociation(IESA)zagreedtoundertakeareadinessassessment“toidentifynear-termindustryopportunitiesandfaci1i
3、tatethe1onger-termstrategicdeve1opmentoftheircomp1ementarysemiconductorecosystems.TheInformationTechno1ogyandInnovationFoundation(ITIF)zaWashington,DC-basedscienceandtechno1ogypo1icythinktank,wascommissionedtoundertakeauthorshipofthisassessment,andinMay2023anITIFrepresentativeundertookafact-findingt
4、riptoIndiaforthispurpose.INITIA1FINDINGSIndiap1anstoexpanditsg1oba1marketshareacrosseachkeyphaseofthesemiconductorThereisevidencethatIndianpo1icyismovingtheneed1eintherightdirection,asinrecentyearsthenationhasdemonstratedconsistentimprovementing1oba1competitivenessindicessuchastheWor1dInte11ectua1Pr
5、opertyOrganization(WIPO)G1oba1InnovationIndex(GII)zthe1ogisticsPerformanceIndex(1PI)zandtheWor1dBankEaseofDoingBusinessreport.Co11ective1y,thisref1ectsarecognitionthatwhi1eitisvita11yimportantthatnationscraftsemiconductorcompetitivenessstrategiesandextendeffectiveincentivestoattractsemiconductor-sec
6、toractivity,themostimportantdeterminantofanations(and/orstates)abi1itytoattracthigh-techinvestment(whetherfromdomesticorforeignsources)isthequa1ity,stabi1ity,andpredictabi1ityofthebusinessenvironmentitoffers.Manynationshaverecent1yintroducedstrategiesandincentivepackagestoattractsemiconductormanufac
7、turingactivitytheseinc1udetheCHIPSandScienceActintheUnitedStates,theEUChipsActinEurope,andtheK-Be1tStrategyinKoreayetIndiaofferssomeofthemostattractiveincentivesg1oba11y.Intota1,Indiaisoffering$30bi11ioninsupportforsemiconductorsandre1atedindustries,inc1uding$10bi11ionforthesemiconductor/disp1aysect
8、or;$7bi11ionfore1ectronicsmanufacturing;and$13bi11ionforre1atedsectorssuchasso1arphotovo1taicce11s,e1ectricandotherautomotivevehic1es,andwhitegoodswhichmattersbecausethesewi11bekey,growingsectorsoftheIndianeconomy(a1ongsideICTsande1ectronics)demandingconsumptionfortheanticipatedincreasesinIndiansemi
9、conductoroutput.Indianpo1icymakersrecognizethatthestab1e,secure,anddependab1esupp1yofe1ectricityisafoundationa1startingpointtowardattractingsemiconductormanufacturinginvestment.Tothisend,theIndianfedera1governmenta1ongsideIndianstateshasmadeconsiderab1einvestmentsinincreasinge1ectricityproductionand
10、deve1opingre1iab1eandredundante1ectricitygrids.Indiasinsta11edcapacityof410gigawatts(GW)isnowthewor1dsthird1argest,withanever-greatersupp1y,at1east172GWzbeingrenewab1epower.Indicativeoftheincreasingqua1ityofIndiase1ectricgridzIndiasSemiconductor1aboratoryhasnotsustainedapoweroutagesince1983.Severa1r
11、egions-suchasDho1erazinGujaratzwhichisseekingtoestab1ishasemiconductorc1usteraswe11asMysuruzinKarnatakaa1sohigh1ightedsignificantrecentimprovementstotheirrespectivewater/sewer,port,airport,roadzandhigh-speedrai1infrastructure.Indianpo1icymakersrecognizethatregu1atory,taxzandcustomsenvironmentsareimp
12、ortantconsiderationsinattractingg1oba11ymobi1ehigh-techinvestment.Tothisend,Indianpo1icymakershavemadestridesinsettingupsing1e-windowc1earanceforbusinesses(i.e.IndiasNationa1Sing1eWindowSystem(NSWS)digita1p1atform),butmoreprogressisneeded.E1sewherezIndiahasworkedwithsemiconductordesignfirmsande1ectr
13、onicsmanufacturerstodesignadvancedpricingagreements(APAs)zagreementsbetweentaxpayersandnationa1taxauthoritiesdeterminingthetransferpricingmethodo1ogyforpricingtaxpayers7internationa1transactionsforfutureyears.InJu1y2017zIndiasignificant1ysimp1ifiedandstream1ineditstaxsystemwiththeintroductionofthego
14、odsandservicestax(GST),essentia11yadestination/consumption-basedtaxthatrep1acedoneofthewor1dsmostcomp1icatedorigin-basedindirecttaxsystems.Stabi1ity,certainty,andefficiencyareimportantattributesofnationsandstatestaxenvironmentsthatenterprisesassesswhenmakingg1oba11ymobi1einvestmentdecisions.Whi1eInd
15、iabringsanumberofstrengthstothetab1eandisa1readyhigh1ycompetitiveinsemiconductorresearchanddesign,Indiascapabi1itiesin1arge-sca1emanufacturingarecurrent1y1imited,butpoisedtogrowsignificant1y.Manufacturingsemiconductorsisoneofthemostcomp1exmanufacturingendeavorshumanityhaseverundertaken,andtherea1ity
16、isIndiasexperienceinthisfie1dis1imited.ThisiswhytheGovernmentofIndiaseffortstojump-startsemiconductormanufacturingaresoessentia1andtheestab1ishmentoftheIndiaSemiconductorMission(ISM)andthere1atedProduction-1inkedIncentives(P1I)Schemeissotime1y.Further,movingbitswithinthesemiconductorsupp1ychainisasimportantasmovingatomsacrossg1oba1supp1ychains,meaningdataandinformationshou1dbenomoredutiedthankeyinputs,components,orfina1goodsinthissector.Thisi