In a bid to boost semiconductor manufacturing in India, the Union Cabinet has approved incentives worth Rs 76,000 crore (greater than 10 billion USD) for the development of semiconductors and display manufacturing ecosystem in India. This takes the total sum allotted by the government for boosting electronics and semiconductor manufacturing in India to Rs 2,30,000 crore (USD 30 billion approx.).
With this development, the government aims to boost semiconducting manufacturing in India to incentivise companies that manufacture semiconductor fabs, display fabs, compound semiconductors, sensors (including MEMS), semiconductor packaging and semiconductor design. In addition to this, the government plans to train 85,000 to 100,000 technicians and engineers, who will work in these manufacturing facilities.
As per the official release, this development is expected to pave the way for ‘globally competitive incentive packages to companies in semiconductors and display manufacturing as well as design’. Notably, the move comes at a time when chip manufacturers such as TSMC and Intel are setting up more manufacturing capabilities to mitigate the ongoing global chip shortage.
Here are 10 things you should know about the government’s latest announcement
- As a part of the announced scheme, the Indian government will provide fiscal support of up to 50% of project cost on equal-footing basis to semiconductor fabs and display fabs manufacturing companies that are found eligible for this scheme.
- The union government will work with the state governments to establish high-tech clusters with requisite infrastructure, which includes land, semiconductor grade water, high quality power, logistics and research ecosystem. The government plans to set up at least two greenfield semiconductor fabs and two display fabs in the country.
- As a part of the program, MeitY will take steps to modernise and commercialise the Semi-Conductor Laboratory (SCL). MeitY will also explore the possibility for the Joint Venture of SCL with a commercial fab partner to modernise the brownfield fab facility.
- The government will provide fiscal support of 30% of capital expenditure to companies that are selected to manufacture compound semiconductors, silicon photonics, sensor fabs and semiconductor ATMP and OSAT facilities in India.
- The government plans to set up at least 15 facilities for manufacturing compound semiconductors and Semiconductor Packaging under this scheme.
- The Design Linked Incentive (DLI) Scheme will extend product design linked incentive of up to 50% of eligible expenditure and product deployment linked incentive of 6% – 4% on net sales for five years.
- The government will support 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems and IP Cores and semiconductor linked design. The government will also facilitate the growth of at least 20 companies that achieve turnover of more than Rs 1500 crore in the coming five years.
- The government will set up “India Semiconductor Mission (ISM)” that will be led by global experts in the semiconductor and display industry. It will act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.
- Additionally, PLI scheme will provide Rs 98,000 crore (USD 13 billion) to the allied sectors comprising ACC battery, auto components, telecom & networking products, solar PV modules and white goods.
