In an interview with CNBC-TV18, Union IT and Telecom Minister Ashwini Vaishnaw emphasised that India is actively developing a complete ecosystem for the semiconductor industry. As part of this effort, the government is offering dollar-for-dollar incentives to support the expenses incurred by participants in this sector. Vaishnaw also highlighted the significance of Micron Technology's decision to establish a unit in India, emphasizing its importance for the country.

Furthermore, Vaishnaw expressed optimism regarding the future of the semiconductor industry in India, stating that the country may witness two or three more significant announcements in this sector within the coming months.

Below are the excerpts of the interview.

Q: Let me start by asking you on the broader partnership between India and the US. The ICET is already operationalised, that is the understanding that the two sides have as far as critical and emerging technologies is concerned, how much progress has been made on that front?

A: This is a very important milestone in our journey towards developing the semiconductor industry. As you are aware, we have taken a very comprehensive outlook and instead of forcing through a fab, we have focused on creating the ecosystem. It is very important that we create the ecosystem so that the industry can grow sustainably.

The announcement of Micron Technologies to set up the first semiconductor unit in India is very important for us. Simultaneously the announcement from Applied Materials to setup their engineering centres so that those complex and sophisticated equipment which go into the semiconductor industry can be designed in India and be made in India.

Also the focus on training, developing talent, Lam Research, will be using their state of the art semi verse, which is a virtual reality based system to train 60,000 engineers into manufacturing semiconductors. So this is a very good endorsement. I am very glad that Prime Minister Narendra Modi's visit has led to this major development.

Q: If I can address each of those announcements individually, and let's start by talking about Micron because that is the big one. There will be a component of what the Centre puts on the table, which is about 50 percent and what the state government in the state of Gujarat can put on the table, which amounts to about 20 percent. Can you explain the structuring and the contours of the incentives, how they will be rolled out, and what it will eventually mean both for the center as well as for the state government?

A: Our semiconductor programme right from the beginning, had a very clearly defined structure for giving the incentives. This is a new industry, this is a very complex industry and this has a great impact on the way our economy grows. So right from day one, we were very clear to learn from whatever sources we could learn all across the world. So with the experience of the world and our experience of the past, we decided to structure it in a way where we will be giving the incentive pari passu or dollar for dollar, whatever investments they make in the construction of the facility, getting the plant setup, getting the entire ecosystem setup, that same amount we will be putting in, in the plant. The government of Gujarat is topping up that incentive through its own cabinet approved policy. So this is going to be a very important milestone.

What's important is, when the first plant comes, the chemicals which are required in the semiconductor industry, the gases which are required in the industry, the equipment manufacturers, the entire ecosystem of logistics which is required, it's a very precision kind of industry, all that starts coming and that sets the stage for the entire industry to grow. So we are very hopeful and we have very high level of confidence that we should be seeing two or three major announcements in the coming months.

Q: When do you expect the Micron facility to be operationalised? What's the indication given by the company and also what is the approved capacity that’s being cleared for Micron specifically?

A: Land allocation has been practically done, the design for the plant is practically frozen, the construction agencies are getting finalised. So we expect that within six quarters from now, the production should start.

Micron is the leading memory manufacturer in the world. So a series of products in the memory value chain, they will all be manufactured here. I would not be able to put a complete number on which particular memory will be how much capacity, but the overall when the plant ramps up to its full production, the revenue from the top line, the turnover from this plant will be of the order of a billion dollars per annum.

Q: Let's address the 2-3 big announcements that you said we should expect. How soon can we expect those? And are you suggesting that you are in talks with other companies? There was a lot of speculation on whether the likes of Intel are in dialogue with the Indian government? Are we likely to see some other large semiconductor players looking at investing in India? Is that what you're suggesting we should look forward to?

A: Yes, that's correct. I wouldn't like to take any names, but there is very good interest. So let me put the entire context. The semiconductor industry is growing from $650 billion to a trillion dollars over the next five to six years, seven years. That's the kind of growth which the industry is seeing. The talent that will be required is of the order of a million new talent required in this industry. Where is that talent? That talent is in India. Where is the focus on ecosystem?

That focus on ecosystem, making sure that the logistics, the power supply, the water supply, the chemicals, gases, design, everything is put in place in a very comprehensive program that's coming in India.

So when I met about 45 companies in US in the semiconductor industry, ranging from equipment manufacturers to fabs to design to software to people who are consulting with the semiconductor industry, each one of them very clearly said that India's approach is the right approach. And this is the approach which will create the next big semiconductor industry in the world. So, the entire approach is very methodical and not to rush through. The entire approach is to focus on creating all the pieces in place, setting all the pieces in place so that the industry can grow over the next few decades.

Q: We have also got a situation at this point in time where the US is hoping to ramp up manufacturing capacity. The US has brought in the Chips Act, which is $50 billion and more in terms of incentives. So, are we likely to see the Indian government up the incentive program? Is semicon going to be bolstered further? Are we likely to see more incentives being rolled up to try and draw in future investments?

A: India and US have complementary strengths. The way we have structured it and this was reflected in the MoU that India and US signed when Secretary Raimondo had visited India. And now that is further bolstered during Prime Minister Modi’s state visit to US.

There is a clear and a through thought approach towards developing semiconductor industry as two partners. This entire industry has various segments, some of the segments US will focus, some of the segments India will focus, there will be many areas in which the manufacturing happens jointly between India and US. That is the approach we are taking. There will be many areas where research and development happens jointly between India and US. There will be talent development programmes, which are jointly taken up for example, our MoU with the LAM Research. All these points towards a very clear partnership where both the countries are able to add value to each other's programme.

The amounts will all depend upon the progress of the utilisation of funds. As the first tranche of $10 billion in India gets utilised, we can look at further support to this industry. Also, as we have seen in many industries, after the first setup happens, then the industry also takes its own momentum and things move in a totally new direction.

Q: I just wanted to understand this MoU that you spoke off, which was inked between India and the US when Secretary Raimondo was in the capital. You spoke about the arrangement where you said some areas the US will drive, some areas India will drive and some will be driven jointly. On R&D, on intellectual property (IP), will IP be shared as well? How will that work between India and the US? What is the agreement? What is the understanding?

A: The way semiconductor industry works is, every product that we see will have multiple IPs which are built into the substrate, the other the design part or let me put it in a non-technical way, every layer of this industry builds upon something which has been built before. It's a very clearly defined IP regime in which this industry works, that same regime will hold course in this MoU also.

What's important is, we are cooperating on co-creating technologies. So for example, as part of the ICET, in telecom, when the US government and its agencies evaluated the development of 4G and 5G telecom stack that we have done, which is among the first virtualised telecom stack to be developed, looking at that progress, both countries decided to develop the next leading edge technology, which is ORAN together. So, that approach is that these are the critical and emerging technologies in which both countries can contribute to co-develop, co-create, which are useful for both countries and useful for the world.

Q: I just wanted a clarification, because there have been some changes that the government has announced with respect to the semiconductor policy, especially in terms of clearances, now only a cabinet approval is going to be needed. One, why did you feel the need to bring in those changes? Two, specifically on the Vedanta Foxconn venture, there's been a lot of back and forth on where things currently stand. Is that likely to move forward or not? If you can clarify on both these.

A: Our semiconductor programme is driven by some of the best professionals in the world- people like Vinod Dham, Arogyaswami Paulraj. These are the names in the industry which are known globally. So as we learn, as we progress in this programme, whatever changes are needed, we must make those changes; that is the approach we have followed, very open minded approach, very consultative approach, an approach in which making sure that India develops this very important foundational industry for its future. So that's the approach we have followed. That's why as and when we have felt the need to change the policy, we have changed it. And I'm very glad that our prime minister has followed that open minded approach so that this industry can grow sustainably.

On the Foxconn and Vedanta proposal, we have asked them to resubmit under the new window so that it can be evaluated afresh. Once they resubmit their proposal, we will be able to evaluate it and give the correct assessment.

Q: Any reason why they've been asked to resubmit? It's already been several months when they were cleared and shortlisted. So any specific reason why they've been asked to resubmit?

A: The qualification criteria which was laid out when the programme was first rolled out one and a half years ago, many of those criteria have changed, the industry has also seen a kind of change in its composition. There is a very clear understanding within the entire semiconductor industry today, that the entire range of nanometers, the node size will be important going forward because the way telecom industry is growing, the way electric vehicle industry is growing, the way power electronics is growing, that need will be there throughout the spectrum of nodes. So from all the way from 14 nanometer, 8 nanometer to 80 nanometers, 90 nanometers. So that change is reflected in the changes that we made, the modifications that we did in the semiconductor programme. So we are requested all the earlier applicants to change their proposals to resubmit their proposals as per the revised guidelines.

Q: You spoke about two or three announcements that we should expect, are these all likely to be US companies that will in some form or fashion set up base or partner with India or invest in India or are these likely to also include non-US companies?

A: People from all over the world are showing interest. There is a lot of interest from non-US companies also. And of course, the US companies are very much interested.

Q: Would it be fair to assume that India will take the lead largely on the fabless side, on the design development R&D side, given the talent that we enjoy?

A: Of course, India is one of the major design centers in the world with about 50,000 design engineers working for various organisations in the world. That lead is already practically there. Now, the lead will be more in manufacturing.

If you look at the cost structure of this industry, one India will have a very competitive cost structure. Two, this is an industry where design element is very much a part of the manufacturing process unlike many other industries where the design can be done in one place and manufacturing can be done totally in other places.

This is an industry where throughout the manufacturing process very sophisticated technologies are there, very sophisticated design inputs are required. So, that's why our combination of low cost comprehensive ecosystem and availability of design talent gives us a huge advantage. That is what the world is looking at. And after the first successful semiconductor unit being set up, and the world is also watching the progress of Micron unit. So once that happens, the confidence in the industry grows very significantly. That's what we're expecting.

Q: Is there likely to be a tripartite partnership between India, US and Taiwan perhaps coming on board? The US of course making no bones about the fact that they want to deepen their engagement and have been deepening their engagement with Taiwan. Taiwan of course, is the capital as far as the semiconductor industry is concerned. Are we likely to see a tripartite arrangement of any sort?

A: Quad is already there. Quad has considered semiconductor as one of the key sectors on which the four countries must cooperate. So, yes, there is a multi-lateral and a geopolitical kind of help that we are getting, kind of tailwinds that we are getting, so that of course is there. Companies from Taiwan are also showing good interest in diversifying their production base into India.

Q: Let me ask you about the big buzz today and that is artificial intelligence (AI). I understand that both sides are engaging on what can be done as far as possible regulation is concerned etc. Where do those talks lie? Where does that dialogue stand between both sides especially when we talk about something like artificial intelligence?

A: We are consulting with the industry, we are talking very intensely with the industry to see what is the right approach towards regulating AI. On the one hand, we have to make sure that the innovation continues. AI has been there for last many years in India. Sector after sector has been using artificial intelligence in India. So without killing the innovative part of AI, how can we make sure that the harm which can cause from the power of using AI, especially in creating content, how to limit that harm, that's the focus of our discussions and we have got very constructive inputs from the industry. We definitely will be moving in a way, which will be good for innovation, good for society, while making sure that AI remains safe, making sure that the harm from AI doesn't come to the humanity.

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Q: Since we're talking about AI, data regulation and privacy are also challenges that governments across the world are grappling with. I want to understand from you on the recent reports, as far as the Cowin data breach is concerned, and now there is I'm given to understand the possibility of an investigation. I don't know whether that has in fact, been formally launched or not by the government. But if you can help clarify on what you believe has happened there and how the government plans to address it?

A: Very detailed investigation has been going on in that case. And I would not like to comment on it at this point of time. But the investigation has actually figured out what exactly was the root cause. So let the investigators really come out and make that announcement.

What's important is that every step that needs to be taken for protecting the privacy of our citizen’s data is being taken. The Digital Personal Data Protection Bill, that also has made very good progress, and hopefully we should be tabling it in the parliament in the monsoon session. Overall, the comprehensive regulatory framework for digital economy — the Telecom Bill, the Digital Personal Data Protection Bill and the Digital India Bill, all the three bills which will lay out the framework for digital economy regulation, are making very good progress.

Q: You anticipate that all three will move in the monsoon session? Or do you believe that it's only going to be the Digital Data Protection Bill that will make it to Parliament in the monsoon session?

A: We are targeting Digital Personal Data Protection Bill as the bill to be tabled in the monsoon session and the other two bills in the later sessions.

Q: Since we're speaking about investigation, and here in the US as well every member of government that spoke did of course offer their deepest condolences on the horrific train tragedy that took place. There is an investigation, there is also a CBI probe that's currently underway. What can you share with us at this point in time, in terms of what you believe have been the lapses and more importantly? What will be the remedial measures from hereon?

A: We have invested close to Rs 1,78,000 crore, which is about $22 billion in safety in the last nine years. That much amount has gone in improving safety in the railway systems. The whole focus over the last nine years has been to come up to the world standards in terms of automatic train protection. From 2016 when the new system was developed and tested, all those steps have gone in and we have a very sincere and scientific approach towards improving safety in railways.

The recent sad incident, the tragic incident, the investigation in that is being done in three different ways. One is the internal technical investigation of railways itself, second is the statutory body, the commissioner of rail safety (CRS), they are doing their investigation. That's a body which is outside railways. Third is of course, the CBI investigation which is going on. All the investigations are progressing significantly. And we do think that very soon we should get the final output from those investigations.

Q: Some announcements have already come in and some more you've told us are likely to come in as well. By the end of this calendar year, what would you believe are the milestones that you're likely to be able to achieve? What would you hold as being satisfactory performance as far as your efforts to actually move forward with the semiconductor policy and drawing in investments, what are the targets that you've set for yourself?

A: When the programme was launched, we promised to the country that within 14 to 16 months, we should have the first major breakthrough. And I'm so glad that our prime minister has guided us throughout this process. From every step of the process he has taken personal reviews, he has taken multiple reviews and today we are at a very good milestone, which is the announcement of Microns first semiconductor unit.

In the next 12 months from now, we should be able to have at least one more major semiconductor unit announced, we should see construction of the first unit at a good pace, we should see the first batches of semiconductor engineers from the course curriculum we have done, the 104 universities with which we have tied up, that should progress very well. In the next 12 months, that would be the focus.

And the next big focus will be to make sure that those 250 odd different ecosystem partners which have to come, they come to India, they set up their bases, they set up their partnerships and make sure that they are very comfortably placed. They should be comfortable working in our ecosystem, our environment. So once that is set, then it becomes a hockey stick like growth. So that will be our focus- setting the base.

(Edited by : Pradeep John)