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Chip manufacturing expected to create 50,000 jobs in India

Several Indian and foreign companies setting up facilities in India

Question: Three years ago the Indian Government had announced a policy to set up manufacturing of semi conductors. Has this policy borne any fruits considering the fact that the shortage of this product is now being felt globally?

Answer: Under the first package announced by the Government, an incentive of Rs760 billion was given, which has encouraged several Indian and foreign companies to set up facilities in India for manufacturing and design of semiconductor chips. Two units have been set up by the Tata Group in Gujarat and Assam with a total investment of around Rs1.2 trillion.

It is expected that sophisticated chips will be manufactured and 50,000 jobs will be created. Generally, every semi conductor job leads to ten additional jobs in the ecosystem. A Dutch company has set up R&D facilities to boost semiconductor production in India with an investment of around $1 billion. A Japanese company has also availed of incentives offered by the Indian Government, undertaking value added semiconductor design activities for the global market.

Enthused by this response from Indian and global players, the Government has announced a second phase of the semi conductor policy. Though the quantum of the incentive is not known at present, it is expected to be bigger than the amount of Rs760 billion which was available under Phase I. The Indian Government is determined to ensure that the country emerges as a trusted partner for supplying advanced chips across the world and that every electronic device has an Indian-made chip.

Question: Electronic transactions are growing exponentially not only from India but from most countries. This has also increased the risk of money laundering and terrorist funding operations being undertaken. Are any measures being taken to provide guardrails?

Answer: The Indian Government is fully supporting the global financial crime watchdog, Financial Action Task Force, which has proposed stricter norms to be applied in respect of online transactions. The policy development group of the FATF is deliberating on the quantum of information required by law enforcement agencies. There is concern that masking of information leads to delay in information sharing by financial institutions involved in cross border transactions. Greater access to data is seen to be critical to track and act against those violating the system.

Given the threat of terror financing impacting India, the Government has sought to tighten the rules to check possible misuse. India has supported FATF which has tightened norms for multiple actors, including virtual digital asset players, gems and jewellery dealers, and real estate developers where, according to FATF, there is scope for tax evasion and money laundering. Industry players have expressed their concern as it will increase cost of compliance due to changes which will be required to be made in software and protocols.

Question: There is a lot of talent in India for software development. However, millions of Indians are not fluent in English. Will this be a hindrance for growth?

Answer: Artificial intelligence is breaking down language barriers and fostering an inclusive coding environment. This empowers non-English speaking developers to make strides in contributing to the open source coding community and make significant contributions to the world of programming. In short, AI is a great leveler as it is going to make it easier to navigate an existing code base even if you are proficient in Hindi or other regional languages. AI tool like the GitHub platform will democratize the collaboration model even more than open source has already done. This will tap into a vast pool of coding talent which will drive technological progress and innovation on a global scale. So far the total number of Indian developers is estimated at around 15 million as against 5.8 million in 2021. It is expected that the developer community in India on GitHub will surpass that of the United States by 2027. This will make India the largest nation of software developers which will fuel enormous economic opportunity for India.

The writer is a practising lawyer, specialising in corporate and tax laws of India.