Manufacturing Sector Needs a Reinvention for India's Corporations to Stay Pertinent, According to Vellayan Subbiah of Murugappa Group
Article: Vellayan Subbiah Highlights Challenges in India's Semiconductor Sector
Published on July 25, 2025
At the 189th Annual General Meeting of the Madras Chamber of Commerce and Industry (MCCI) in Chennai, Vellayan Subbiah, Executive Chairman of Cholamandalam Investment and Finance Co Ltd, called for systemic progress in India's semiconductor sector.
Subbiah emphasized the need to address several current challenges that India faces in the sector. One of the most pressing issues is the talent shortage, particularly in critical niche areas such as lithography, device physics, and analogue design. To tackle this, Subbiah suggested a combination of long-term skill development and short-term hiring of expatriate experts.
Another challenge is India's heavy dependence on imports for over 80% of semiconductor-grade critical raw materials. This leads to delays at customs and supply chain disruptions, posing significant operational challenges. Subbiah also highlighted the need for infrastructure development, such as ultra-pure water, steady power supply, and cleanroom logistics, to establish semiconductor fabrication plants.
High costs and capital intensity are another hurdle, deterring private investment despite government incentives. Subbiah urged a focus on capital availability and utilization as a sensitive issue. He also pointed out the geopolitical and policy complexity surrounding semiconductor technology and supply chains, requiring careful engagement with various global blocs.
India's challenge in the semiconductor sector was further highlighted by the fact that only a tiny fraction of global wafer manufacturing happens domestically, and the country currently faces challenges in manufacturing advanced node chips. Subbiah urged Indian industrialists to take significant risks, invest in research and development, and engage in more outbound mergers and acquisitions (M&As) to drive growth in the sector.
Subbiah also noted that India's share of manufacturing as a percentage of GDP is lower than many other Asian countries. He emphasized the need for Indian industrialists to step out of their comfort zones to drive growth.
The event also saw the Chamber present their CSR Awards for 2025, recognising outstanding contributions in various fields. The workforce for India's semiconductor packaging plant is predominantly composed of foreigners, including Filipinos and Mexicans, highlighting the need for local talent development in the sector. Subbiah mentioned that there is much to learn from China, which already had a 'Make in China 2025 policy' 10 years ago.
Subbiah's call for systemic progress, focusing on ecosystem collaborations, localization of operations, talent pipeline expansion, and infrastructure development, echoes the need for India to mature as a resilient semiconductor player on the global map.
- To boost India's semiconductor sector, Vellayan Subbiah proposed a combination of long-term skill development and short-term hiring of experts to address the talent shortage.
- India's heavy dependence on imports for semiconductor-grade critical raw materials necessitates a focus on infrastructure development, such as ultra-pure water, steady power supply, and cleanroom logistics.
- Subbiah highlighted high costs and capital intensity as hurdles for private investment in the semiconductor sector, suggesting a focus on capital availability and utilization.
- The need for Indian industrialists to take risks, invest in research and development, and engage in outbound mergers and acquisitions was emphasized by Subbiah to drive growth in the sector.
- India's low share of manufacturing as a percentage of GDP compared to other Asian countries was noted, with Subbiah urging Indian industrialists to step out of their comfort zones to drive growth.
- Subbiah mentioned that there is much to learn from China, which had a 'Make in China 2025 policy' 10 years ago, highlighting the need for local talent development in India's semiconductor sector.
