CURRENT AFFAIRS – 21/06/2023

CURRENT AFFAIRS - 21/06/2023

CURRENT AFFAIRS – 21/06/2023

Semiconductor fab: the unfinished agenda

To set up a semiconductor fabrication plant in India is not mere hubris. There is a growing market. There are also strategic reasons: India’s susceptibility to coercion increases due to its dependence on the import of semiconductors. Therefore, the government’s 2022 Semiconductor Mission is laudable. But today, there is still uncertainty about whether India will have a fab. In this context, it is important to understand why earlier attempts failed and examine alternate approaches.

Earlier attempts

The first serious attempt was made in 2007 in the form of a Special Incentive Package (SIP), but it yielded no response. The second attempt in the form of Modified SIP in 2012 fared better. After over two years of extensive outreach with practically all the major fab companies in the world, India came close to having a fab. Two consortia were approved by the Cabinet with an attractive set of incentives. Jaiprakash Associates in partnership with IBM and Israeli company TowerJazz constituted one, while the other was led by Hindustan Semiconductor Manufacturing Corporation along with ST Microelectronics. The two fabs together involved investment of $10 billion, and the government offered incentives amounting to nearly $5 billion in the form of cash and tax cuts. Locations for the fabs were finalised and land was allotted. But finally, both failed to mobilise resources.

Semiconductor fabrication represents the ultimate frontier of human tech advancement. The frontier has been advancing adhering to Moore’s law that the number of transistors in a unit area doubles every 18 months. But the progress of miniaturisation is accompanied by higher complexity and costs. As a result, the industry has seen a decline in the number of participants.

China started late in the semiconductor fab industry. But backed by massive government financial support over the last two decades, it acquired hundreds of loss-making fabs from around the world and built its fab industry. Aided by lower manufacturing costs and a massive electronics manufacturing industry, China’s chip production has grown rapidly. By the time the U.S., the traditional leader in this game, realised, China had become one of the major producers of chips. Aided by its market supremacy in rare earths, which are essential for chip production, it has a strategic stranglehold on chip-making. Over the last year, the U.S. and its Western allies have blocked the transfer of the latest fab-related technology to China. But this could be a case of closing the stable door after the horses have bolted. The U.S. enacted the CHIPS and Science Act in 2022, with nearly $40 billion in subsidies, in an effort to bring back semiconductor manufacturing to the the country. The European Union sanctioned €7.4 billion for a new fab in France. India will have to contend with these countries in what has become an intense chip warfare.

Investment in a semiconductor fab is one of the riskiest. Billions of dollars need to be recovered before the technology becomes obsolete. This necessitates substantial production volumes for economic viability, often reaching levels that are adequate to meet global demand. It is therefore difficult to conceive of a fab which is based on the domestic market only. The advantage of semiconductors having a small freight-to-price ratio and a zero-custom duty regime under the Information Technology Agreement, 1996, facilitates production in a single location and global sales. This is why no company is interested in setting a greenfield fab.

Developing an ecosystem for chip manufacturing in a greenfield location is a major challenge. Hundreds of chemicals and gases are required for chip fabrication, people need to be trained, and abundant clean water be made available. But above all is the art of chip-making. Despite the best of equipment, poor quality and low yields can make fabs fail.

There are other issues, such as whether to set up a logic/processor, memory or analog fab. An electronic equipment and its functionalities are characterised by their logic chips, which are therefore strategically important and generate the highest profit. The most advanced set of technologies is needed to manufacture them. Analog chips are essential, but have the least strategic value. Memory fabs use the most advanced feature nodes, while analog fabs can be even as large as 130 nm. Logic fabs are the most expensive and analog fabs the least. A relatively easier option is Assembly, Testing, Packaging and Marking (ATMP), to get the fab ecosystem developed before the full-fledged fab is set up. But ATMPs have little value in terms of actual chip-making.

Lessons from China

India’s strategy has been to set up a new logic fab. China, which acquired loss-making fabs and then set up its own logic fab, provides lessons. Acquiring existing fabs has many advantages: they are reasonably priced, have stabilised technology, a supply chain ecosystem, an established product line, and market. They will enable India to build the fab ecosystem and train human resources. Much lower subsidies would be required, and the funds saved could be used for advanced R&D in fab technologies which will help build state-of-the-art fab in next few years. Another strategy could be setting up ATMPs. Tessolve, now acquired by Tatas, had set up an ATMP in 2013-14. This ATMP is successfully packaging chips upto 7 nm feature size. China has over 100 ATMPs.

China started on the fab journey about 20 years ago. As the Chinese saying goes, the best time to plant a tree was 20 years ago, but the second best time is now.

India, which is way behind China on the fab journey, could take lessons from its neighbour

Facts about the News

Importance of semiconductor manufacturing

  • Semiconductor fabrication units turn raw elements like silicon into integrated circuits used in practically all electronic hardware.
  • Fabs are highly capital-intensive undertakings costing billions of dollars for large facilities.
  • Fabs require a highly reliable and high-quality supply of water, electricity, and insulation from the elements, reflecting the high degree of precision, cost, and capital needed to make sophisticated circuits.
  • Countries have spotted strategic value in cornering segments of the value chain for fabs.
  • China has pulled ahead of Taiwan last year in terms of global sales from fabs.
  • The US passed the CHIPS Act to provide subsidies and investments to manufacturers opening fabs and making semiconductors in the US.
  • US also pushed some restrictions and sanctions on the Chinese semiconductor industry.

India’s advantages in semiconductor manufacturing

  • India has an advantage in semiconductor manufacturing as a large portion of semiconductor design engineers globally are either Indian or Indian-origin.
  • Chipmaking firms such as Intel and NVIDIA have large facilities in India that are already flush with Indian talent working on design problems.
  • China is losing control over this advantage in the face of sanctions and an ageing population.
  • Experts believes that without a sustainable pipeline of high calibre talent, China’s goals for the semiconductor sector will not be achievable.

Various challenges

  • Huge Investments involved: Semiconductor Fabrication facility requires many expensive devices to function. Complex tools and equipment are required to test quality and move silicon from location to location within the ultra-clean confines of the plant.
  • Economy of scale:  In semiconductor fabrication, a high volume of production is required to be maintain so as to meet the increasing demand of the marketplace, at the same time, a strong financial backing as Indian market is very much uncertain about financial fluctuations.
  • Requirement highly skilled labourSemiconductor fabrication is a multiple-step sequence of photolithographic and chemical processing steps during which electronic circuits are gradually created on a wafer made of pure semiconducting material. This actually requires high skills.
  • Scarcity of raw materials: From a value-chain perspective, it needs silicon, Germanium & Gallium arsenide and Silicon carbide which are not available in India and needs to be imported.
  • Uncertain Indian market: A semiconductor fabrication facility in India cannot independently rely on Indian customers for their entire sales structure. They have to maintain overseas customer base to balance inflections from Indian market due to market trends, government policies etc.
  • Disposal of hazardous waste: Many toxic materials are used in the fabrication process such as arsenic, antimony, and phosphorus. Hazardous impact on the environment by the industry may act as an impediment to India’s commitment to mitigate climate change.

Initiatives taken by India

Semicon India programme:

It provides $10 bn fiscal support and other non-fiscal measures

The Semicon India Program aims to provide attractive incentive support to companies/consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT) and Semiconductor Design.

  • Make in India: This aims to transform India into a global hub for Electronic System Design and Manufacturing (ESDM).
  • PLI scheme: In December 2021 the Centre sanctioned ₹76,000 crore under the production-linked incentive (PLI) scheme to encourage the manufacturing of various semiconductor goods within India.
  • DLI scheme: It offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.
  • Digital RISC-V (DIR-V) program: It intends to enable the production of microprocessors in India in the upcoming days achieving industry-grade silicon and design wins by December 2023.
  • India Semiconductor Mission (ISM): The vision is to build a vibrant semiconductor and display design and innovation ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design.

UPI payments: relief for users, a headache for banks


The dizzying array of daily limits on United Payments Interface (UPI) transactions set by apps and banks — both in terms of value and volume — has put the spotlight on the rapid rise in such transactions in India in recent years.

In 2021, the National Payments Corporation of India (NCPI) limited the number of daily transactions users can make to 20, and the amount to ₹1 lakh per day. However, banks and apps have come up with their own limits at various points in time in recent months. This has created a complex web of limitations both in value and volume. For instance, according to ICICI bank’s UPI FAQ page, the number of transactions is limited to 10 in a 24-hour period, whereas Bank of Baroda and HDFC Bank allow 20 transactions in the same period.

Such limits were introduced given the surge in the volume of UPI transactions in India in recent years after it was popularised as an alternative to cash in the period after demonetisation. UPI payments were introduced in India as a pilot programme on April 11, 2016.

Chart 1 shows the month-wise volume of UPI transactions in million between April 2016 and May 2023. In May 2018, around 190 million UPI payments were made in India. This rose to 9,415 million in May 2023 — an astonishing increase of nearly 4,855%.

Chart 2 shows the share of various instruments in the volume of retail payments in India over time. In 2017-18, the share of UPI in all retail payments was just 5.9%, while pre-paid payment instruments (wallets offered by Paytm and Amazon, gift vouchers, etc.) and debit cards dominated with shares of over 20% each. In 2022-23, UPI edged out all instruments with its share increasing to over 73%, while pre-paid payment instruments came a distant second with a 6.5% share. Also, the share of credit cards in retail payments decreased from over 11% to just 2.5% in the same period.

However, it should be noted that the surge in transactions was mostly in terms of volume and not value. The value of UPI transactions carried out in May 2018 was ₹33,288 crore, which amounts to ₹1,756 per transaction. The corresponding figure for May 2023 was ₹14,89,145 crore, which amounts to ₹1,581 per transaction — a fall of ₹175 per transaction in five years. Chart 3 shows the share of various instruments in the value of retail payments in India over time. In 2017-18, the share of UPI in the total value of retail payments was just 0.4%. It increased to 21.1% in 2022-23.

When the surge in volume and the decline in value are read together, two trends emerge. First, consumers are increasingly using UPI as an alternative to petty cash, with the value associated with each transaction becoming smaller and smaller over time. Second, according to PwC’s Indian payments handbook, released in December 2020, banks are struggling to keep up with the surge in UPI payments by upgrading their banking infrastructure and technical systems. This struggle is leading to transaction failures. This is also why smaller banks are setting UPI transaction limits which are much lower than even the ₹1 lakh allowed by the NCPI.

Charts 4 and 5 show the volume of UPI transactions through UPI apps and remitter banks, respectively. PhonePe dominates the apps, closely followed by GPay, while Paytm was a distant third. Among banks, State Bank of India was the remitter bank for a majority of UPI transactions, while HDFC was a distant second.

China blocks proposal at UN to blacklist 26/11 terror attack accused Sajid Mir

China on Tuesday blocked a proposal by India and the U.S. at the United Nations to designate Pakistan-based Lashkar-e-Taiba terrorist Sajid Mir as a global terrorist. Mir is wanted for his involvement in the 26/11 Mumbai terror attacks.

Beijing blocked the proposal that had been moved by the U.S. and co-designated by India to blacklist Mir under the 1267 Al Qaeda Sanctions Committee of the UN Security Council as a global terrorist and subject him to assets freeze, travel ban and arms embargo.

In September last year, it was learnt that China had put a hold on the proposal to designate Mir at the UN.

Mir, believed to be in his mid-40s, is one of India’s most wanted terrorists and has a bounty of $5 million placed on his head by the U.S. for his role in the November 2008 terror attacks in Mumbai.

In June last year, Mir was jailed for over 15 years in a terror-financing case by an anti-terrorism court in Pakistan.

Pakistani authorities had in the past claimed that Mir had died, but Western countries remained unconvinced and demanded proof of his death.

This issue became a major sticking point in the assessment by the Financial Action Task Force (FATF) of Pakistan’s progress on the action plan late last year. “Mir was LeT’s operations manager for the attacks, playing a leading role in their planning, preparation, and execution,” the U.S. State Department has said.

Beijing, an all-weather friend of Islamabad, has repeatedly put hold on listings to blacklist Pakistan-based terrorists under the sanctions committee of the UN Security Council.

For his role in the Mumbai attacks, Mir was indicted in the U.S. in April 2011.

India’s first mRNA vaccine against Omicron approved

GEMCOVAC-OM, India’s first indigenous mRNA vaccine for the Omicron variant of the novel coronavirus, was approved under emergency use guidelines by the Drug Controller General of India (DCGI) late on Monday. This comes a year after the Pune-based Gennova Biopharmaceuticals Ltd. got approval for GEMCOVAC-19 against COVID-19.

Both the vaccines are yet to be commercially available, though Gennova officials said at a press conference on Tuesday that the vaccines were likely to be formally “launched and rolled out” within the next “two to three weeks”.

The company said GEMCOVAC-OM was stable in a 2-8 degrees Celsius range and hence could be stored in ordinary refrigerators. It could be administered into the skin via a “needle-free” PharmaJet system.

Data from clinical trials, which are not public yet but submitted to the DCGI for review, suggested that GENCOVAC-OM had a “greater” safety profile as Covishield and generated more neutralising antibodies, said Gennova CEO Sanjay Singh.

Facts about the News 

How does the mRNA vaccine work?

The mRNA vaccines function differently from traditional vaccines. Traditional vaccines stimulate an antibody response by injecting a human with antigens. mRNA vaccines inject a fragment of the RNA sequence of a virus directly into the cells, which then stimulate an adaptive immune response mRNA fragment is a specific piece of the virus that carries instructions to build the antigen of the virus. An advantage of RNA vaccines is that they stimulate cellular immunity.

Unlike DNA vaccines, mRNA vaccines are more fragile as the molecules degrade within minutes when exposed to the outside environment, hence they need to be stored at extremely low temperatures.

mRNA Vaccines Different From Traditional Vaccines?

  • Vaccines work by training the body to recognise and respond to the proteins produced by disease-causing organisms, such as a virus or bacteria.
  • Traditional vaccines are made up of small or inactivated doses of the whole disease-causing organism, or the proteins that it produces, which are introduced into the body to provoke the immune system into mounting a response.
  • mRNA vaccines tricks the body into producing some of the viral proteins itself.

They work by using mRNA, or messenger RNA, which is the molecule that essentially puts DNA instructions into action. Inside a cell, mRNA is used as a template to build a protein.

Tribal mat art woven into Yoga Day this time

Besides spreading awareness of the benefits of yoga and meditation worldwide, India will be promoting the skill of its tribal artisans this Yoga Day.

The Tribal Cooperative Marketing Development Federation of India (TRIFED) is collaborating with the Ministry of Ayush to supply 34,000 yoga mats procured exclusively from tribal artisans across the country. These will bear the distinct designs and motifs representative of their respective communities.

Each mat is a vibrant testament to the diverse cultural heritage of India’s tribes reflecting their stories, folklore and artistic legacy, said a senior official at the Ministry of Tribal Affairs.

He added that the effort is aimed at bolstering economic prospects of tribal communities. This year’s theme of International Day of Yoga is ‘Yoga for Vasudhaiva Kutumbakam’, which indicates Indian socio-cultural heritage. Further, it will witness unique features such as the Ocean Ring of Yoga.

Facts about the News

This year’s theme, “Yoga for Humanity,”.

  • The idea of International Day of Yoga (IDY) was proposed by India during the opening of the 69th session of the United Nations General Assembly (UNGA), held in 2014.
  • The UN proclaimed 21st June as IDY by passing a resolution in December, 2014.
  • The first Yoga Day celebrations in 2015 at Rajpath in New Delhi created two Guinness World Records.

– It was the world’s largest yoga session with 35,985 people.

– 84 nationalities participated in it.

2014: Indian Prime Minister Narendra Modi proposes the idea of International Yoga Day at the United Nations General Assembly.

2015: The UN General Assembly adopts the proposal and declares June 21 as International Yoga Day.

2016: The first International Yoga Day is celebrated around the world.

2019: The UN General Assembly declares that International Yoga Day will be celebrated every year on June 21


M-Yoga App:

New website for International Day of Yoga (IDY):

  • This web portal provides all the updated and relevant information relating to International Day of Yoga.
  • It has a social wall where all the social media interactive platforms are available for the visitors to keep track on the discussions and participate in them.
  • The portal is also linked to important web pages such as Swachh Bharat, Make in India, etc.

Yoga recognised as a Sports Discipline:

  • The Ministry of Youth Affairs and Sports, after reviewing categorization of various Sports disciplines, recognised Yoga as a sports discipline and placed it in the ‘Priority’ category in September 2015.

Common Yoga Protocol:

  • The Ministry of AYUSH in its ‘Common Yoga Protocol’ has listed Yama, Niyama, Asana, etc. among popular yoga ‘sadhanas’.

Vocational Education Courses in Yoga:

  • The Beauty & Wellness Sector Skill Council (B&WSSC) has vocational education courses in Yoga for CBSE schools.
  • B&WSSC is established as a non-profit organization under the aegis of National Skill Development Corporation, Ministry of Skill Development and Entrepreneurship.

Various Skilling initiatives:

  • Thousands of candidates have been trained as yoga instructors and trainers through various skilling initiatives like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY).
  • PMKVY is the flagship scheme of the Ministry of Skill Development and Entrepreneurship.

Fit India Movement:

  • Yoga is also a part of the Fit India Movement.
  • Fit India Movement is a nation-wide campaign that aims at encouraging people to include physical activities and sports in their everyday lives.

What is the contention between Coal India and CCI?

Why did the Competition Commission of India impose a penalty of ₹591 crore on the PSU?

The story so far:

On June 15, the Supreme Court held that there was “no merit” in Coal India Ltd (CIL), a public sector undertaking, being excluded from the purview of the Competition Act. The Court was hearing the PSU’s appeal against the Competition Appellate Tribunal’s order which alleged the former of abusing its position.

What was the case about?

The chain of events goes back to March 2017 when the Competition Commission of India (CCI) had imposed a penalty of ₹591.01 crore on CIL for “imposing unfair/discriminatory conditions in fuel supply agreements (FSAs) with the power producers for supply of non-coking coal.” In other words, CIL was found to be supplying lower quality of the essential resource at higher prices and placing opaque conditions in the contract about supply parameters and quality. The regulator contended that Coal India and its subsidiaries operated independently of market forces and enjoyed market dominance in the relevant market with respect to production and supply of non-coking coal in India.

What did the PSU argue in court?

Coal India argued that it operated with the principles of ‘common good’ and ensuring equitable distribution of the essential natural resource. With this objective, it was secured as a ‘monopoly’ under the Nationalisation Act, 1973 (more specifically, the Coal Mines (Nationalisation) Act, 1973).

The entity said that it may have to adhere to a differential pricing mechanism to encourage captive coal production (referring to mines that are handed over to companies for specific and exclusive use through lease or any other route). Differential pricing, which may be inconsistent with market principles, was to ensure the viability of the larger operating ecosystem as well as for pursuing welfare objectives. Furthermore, coal supply also has a bearing on larger national policies, for example, if the government were to encourage growth in backward areas through increased allocation.

The PSU stated that it did not operate in the commercial sphere. It specifically pointed to 345 out of its 462 mines having suffered cumulative losses totalling ₹9,878 crore in 2012-13.

How did the CCI respond?

The respondents broadened the scope of the arguments. The Raghavan Committee (2020) report, put up for perusal by the respondents, had observed that state monopolies were not conducive to the best interests of the nation. They could not be allowed to operate in a state of inefficiency and should instead, operate amid competition. Furthermore, coal ceased to be an ‘essential commodity’ in February 2007 and the Nationalisation Act too was removed from the Ninth Schedule (laws that cannot be challenged in court) in 2017. It was also pointed out that Coal India was a fully-government owned entity until the disinvestment in 2010. The government’s shareholding reduced to 67% with the rest held by private hands. Moreover, it was stated that the CIL directed 80% of its supplies to power companies. The latter would then pass power generated using coal to discoms (distribution companies), who, in turn, would supply power to the final consumer. The continual supply of coal, adherence to the contract, reasonableness in the rates and quality of coal also serve a common good, the respondents contended. Coal constitutes about 60 to 70% of the costs for power generation companies. Thus, irregular prices and supply will have a significant bearing indirectly on consumers.

What were the SC’s observations?

The court said there was “no merit” in the argument that the Competition Act would not apply to CIL because they are governed by the Nationalisation Act, and it cannot be reconciled with the Competition Act. “The novel idea which permeates the Act, would stand frustrated, in fact, if the state monopolies, the government companies and public sector units are left free to contravene the (competition) act,” it stated. Separately, it said that entities cannot act with caprice, treat unfairly otherwise or similarly situated entities with discrimination.

According to Anshuman Sakle, partner at law-firm Khaitan & Co, the judgment reinforced the principle of “competitive neutrality” — entailing that the Competition Act equally applies to public and private sector enterprises.


On June 15, the Supreme Court held that there was “no merit” in Coal India Ltd (CIL), a public sector undertaking, being excluded from the purview of the Competition Act.

CIL was found to be supplying lower quality of the essential resource at higher prices and placing opaque conditions in the contract about supply parameters and quality. The CCI had therefore imposed a penalty of ₹591.01 crore on CIL.

Coal India argued that it operated with the principles of ‘common good’ and ensuring equitable distribution of the essential natural resource. The respondents pointed out that Coal India was a fully-government owned entity until its disinvestment in 2010.

Facts about the News 

Competition Commission of India (CCI)?

Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing the Competition Act, 2002, it was duly constituted in March 2009.

The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002, on the recommendations of the Raghavan committee.


  • The Commission consists of one Chairperson and six Members who shall be appointed by the Central Government.
  • The commission is a quasi-judicial body which gives opinions to statutory authorities and also deals with other cases. The Chairperson and other Members shall be whole-time Members.

Competition Act, 2002

The Competition Act was passed in 2002 and has been amended by the Competition (Amendment) Act, 2007. It follows the philosophy of modern competition laws.

  • The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations, which causes an appreciable adverse effect on competition within India.
  • In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established.
  • The government replaced the Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.

Functions and Role of CCI

  • To eliminate practices having adverse effects on competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
  • To give opinion on competition issues on a reference received from a statutory authorityTo undertake competition advocacy, create public awareness and impart training on competition issues.
  • Consumer Welfare: To make the markets work for the benefit and welfare of consumers.
  • Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.
  • Implement competition policies with an aim to effectuate the most efficient utilization of economic resources.
  • Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture competition culture in the Indian economy.