Former RBI Governor Raghuram Rajan criticized India’s Semicon India initiative, suggesting the country rely on external markets or foreign networks rather than spending billions on domestic chip manufacturing. Netizens heavily criticized his views, emphasizing that chips are critical for national security, defense, and industrial self-reliance. Amid global supply chain risks, India is advancing over ₹1.64 lakh crore in semiconductor investments with Tata and Micron to secure strategic autonomy.
Former Reserve Bank of India (RBI) Governor and economist Raghuram Rajan sparked widespread debate and social media criticism following his controversial comments regarding India’s domestic semiconductor manufacturing strategy. Rajan questioned the government’s heavy financial commitment to the “Semicon India” initiative, arguing that allocating billions of dollars to capital-intensive chip fabrication is inefficient.
He suggested that microchips are small and easily transportable, noting that nations like Russia and China rely on alternative supply routes during geopolitical sanctions. Rajan argued that funds allocated for semiconductor subsidies would be better utilized in core infrastructure sectors such as public education, healthcare, and improving the broader business environment. He further added that if shortages arise, the 3.5 crore non-resident Indian (NRI) diaspora could help procure and ship necessary components.
Raghuram Rajan Faces Backlash:
Social media users and industry observers strongly criticized Rajan’s argument, pointing out that relying on informal supply channels for critical national infrastructure is impractical and risky for national security. Critics questioned the logic of avoiding domestic manufacturing for essential high-tech components, drawing parallels to relying on external imports for cars or aerospace defense systems.
Semiconductors are essential components powering everything from commercial smartphones and automotive systems to defense aircraft and guided missiles. The critical need for domestic production became evident in 2021 when global chip shortages forced major automakers like Maruti Suzuki to cut vehicle production by nearly 60 percent. Because global semiconductor design and manufacturing are concentrated in a few regions like Taiwan and the United States, supply lines remain vulnerable to geopolitical conflicts and trade restrictions.
India is currently pursuing self-reliance through over ₹1.64 lakh crore in semiconductor manufacturing investments in partnership with major global and domestic firms, including Tata Group and Micron Technology, with multiple fabrication and assembly facilities coming online.
