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Revitalizing the Indian semiconductor industry
Jayakishore Bayadi
Thursday, February 7, 2008
Many times, business ideas do germinate in dining table meetings, while roaming around the park, while sipping coffee in a café, or while cheering up in the bar with a clinging sound of a glass full of beer. However, the idea of the India Semiconductor Association (ISA) took shape during ‘BoB’ meetings. BoB stands for ‘Brainstorm over Breakfast’ — something unique connected to ISA, a trade body representing India’s semiconductor industry.

Although semiconductor industry did exist in India for more than 20 years, there was no visibility or identity within the society for the Indian semiconductor sector. That was the time when many global players in this space were about to set up their shops in India. Those who already had a presence were in the expansion mood. So, though a potential for growth was there, an efficient ecosystem to evolve was absent.

Besides, Indian companies in the industry had several common concerns. Be it a governmental policy, infrastructure development, or nurturing talent, as the level of talent or expertise required for this industry is very high. Though India had superior talents, there was a lack of awareness about the semiconductor industry.

The ISA was such an initiative when the industry was in troubled times to enable the growth of the industry. “NASSCOM as an Industry body is much more IT and ITES oriented which are the volume segments of the market, whereas the semiconductor industry is a niche specialized area that is in an early stage of growth. “The level of attention needed for this industry was tough for a large body like NASSCOM to provide,” says S. Janakiraman, President and CEO of R&D Services, MindTree and Chairman of ISA. So, everybody in the industry felt that there is a need for a platform or independent industry where the country’s ecosystem can be made more regulated for the growth of the semiconductor sector.

Also, there was no single point of contact to address these concerns. Firstly, the governmental rules and regulations regarding import-export clearances, custom clearances, and taxation were not lucid as far as the semiconductor industry was concerned. For instance, when a company designs a chip and sends it offshore for manufacturing and brings it back to do the testing, government used to levy customs duty on the shipment thus making companies cough up more by way of taxes. The government lacked a clear understanding of the concept regarding the way the industry functions. Secondly, there was no common forum where smaller companies could interact with other trade bodies and global industry bodies to enhance the relationship. “Also, the Indian companies found it difficult to sell their IPs individually. So industry members felt the need for all the industries to come together and cooperate on standards and compete on business,”says Dr.Sridhar Mitta, MD and CTO, e4e.

Then the industry members like Rajendra Kumar Khare of Surewaves, Dr. Anand Anandkumar of Magma, and Dr.Vinod Agrawal of SemIndia, S.Janakiraman of Mindtree, Dr. Shreedhar Mitta of e4e, Uma Mahesh of Indrion, and others came up with the idea of forming an independent industry body like NASSCOM for the semiconductor industry. Later on about 33 members joined them while forming the India Semiconductor Association (ISA). Finally, the ISA was established in 2004 with its headquarters at Bangalore.

During the initial days, BoB meetings were strictly reserved for brainstorming about the future course of action. “During the BoB meetings, discussion on major challenges, areas that need to be focused on, the vision, and the charter of the body gave much insight into setting up an independent body,” says Rajendra Kumar Khare, Co-opted member, Ex ISA Chairman, and Chairman and MD, Surewaves. After refining all the opinions, the ISA core values, and the charter of ISA — the talent building awareness, branding the ecosystem, and building of technology leadership were identified as areas that needed immediate care.

Says S. Uma Mahesh, Co-founder, CEO, Indrion Technologies (I) Pvt. Ltd. and member of the ISA,“The fact is that every company cannot discuss about its problems with the government. But when an industry body comes into picture, every company can sit and debate and finalize what are all the points to be discussed with the government and approach it as a team.” Hence, an industry body acts as a common contact point between the government and industry members.

“The ISA is a member-centric neutral platform for the industries to network and build business,” says Poornima Shenoy, President, ISA. Currently, the ISA has around 130 members from the semiconductor and electronics industries across India besides key players in the ecosystem like venture capitalists and legal firms. The greatest benefit to membership is the opportunity to influence and support the ISA’s agenda, and in turn to reap rewards through the association’s many successes.

Membership is advantageous for the companies to develop business relationships, identify investment opportunities, to reach to the government, media and industry, to remove the barriers to movement of goods, and to reduce the entry barrier for startup companies.

Post ISA times are really positive. Khare Says, “Now people have started realizing the importance of the semiconductor industry. There is a strong focus from the government of India which is now coming up with more industry friendly policies related to the industry.”

ISA believes that the newly announced Semicon Policy-2007 is a feather in the cap of ISA. But that was not so easy a task for the ISA. It did detailed research, studied the policies of various countries, and finally submitted the macro report on semiconductor industry in India in 2006. After prolonged lobbying the government came up with the silicon policy in 2007. “This will be a boost to the manufacturing sector in India where the electronics industry is expected to grab 11 percent of the global market share,” states Janakiraman.

One of the major features of the newly announced policy involves a special incentive package to attract investments for setting up semiconductor fabrication and other micro and nano-technology manufacturing industries. “By granting the special economic zone (SEZ) status the government has provided both pre-operative and post-operative benefits to the industry, which is important for the development of the ecosystem, too,” says Khare.

Regarding talent building, the ISA’s direct involvement with educational institutions raised awareness about the industry among the students. The ISA develops a nationwide university program that will help build relevant skill base and companies can leverage on the talent pool.

“India’s strength is its world class talent. It’s ability; skill, quality, and quantity will be the backbone of growth of the industry. The ISA has taken on the task of bridging the divide between the industry and the academia through focused initiatives,” says Poornima Shenoy. Also, the ISA has been in the advising capacity to promote infrastructure development.

A key contribution of the ISA has been its research activities. It has created valuable and highly credible market research reports, like the first of its kind semiconductor and electronics market assessment report in collaboration with Frost & Sullivan, the country competitiveness report with Ernst & Young, and the FabCity report intended to create awareness about the potential of the semiconductor industry in India.

In addition, ISA is in the process of forming Core Initiative Groups and Special Interest Groups to focus on the critical areas that can boost the progress of the semiconductor driven industry in India. In the future BoB meetings the ISA is determined to brainstorm more on education, technology, R&D, design and services, IP development, innovation, and an entrepreneurial eco-system development related to semiconductor industry.

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