The government’s Rs 76,000-crore incentive scheme for development of semiconductors and display manufacturing ecosystem in the country got a start on Saturday with five companies submitting proposals for setting up manufacturing units with an investment of Rs 1.53 lakh crore.
As per an official statement, the companies include Vedanta, which has formed a joint venture with Foxconn; Singapore-based IGSS Ventures; ISMC, which has partnered with Israel’s Tower Semiconductor, and Elest. Vedanta has applied for two units, one on its own and the other in partnership with Foxconn.
While the government will examine the proposals and take a final call on them, even if approved, the real challenge for foundries — the epicentre for chip fabrication — eventually set up in India would be to get global orders. Currently, India is attractive as a design centre but not fabrication. Ultimately, it is the relocation of global units into the country that would determine the success of the policy, as any unit which is not assured of large-scale orders runs the risk of low capacity uitlisation.
Indian and global firms can still reach out to the ministry of electronics and IT (Meity) with proposals to set up fab units. Based on the response, a second round of applications will be opened.
For semiconductor fabs, three firms have applied — Vedanta through a joint venture with Foxconn, Singapore based-IGSS ventures, and ISMC Analog Fab, which is led by investment agency Next Orbit Ventures Fund. The technology partner proposed by ISMC is Tower Semiconductor Limited (Israel). The applications have been received for setting up 28 nm to 65 nm semiconductor fabs with capacity of approximately 1,20,000 wafers per month, and the projected investment is of $13.6 billion, where fiscal support from the government is being sought for nearly $5.6 billion.
For display fabs, two firms — Vedanta and Elest — have submitted applications with projected investment of $6.7 billion and fiscal support sought is for around $2.7 billion.
Apart from the five firms that have applied for display manufacturing plants, SPEL Semiconductor, HCL, Syrma Technology and Valenkani Electronics have registered for semiconductor packaging and Ruttonsha International Rectifier has registered for compound semiconductors. Three companies — Terminus Circuits, Trispace Technologies and Curie Microelectronics — have submitted applications under the design-linked incentive scheme.
Under the scheme, the government will extend financial support of up to 50% of project cost for at least two semiconductor and two display fabs, for a minimum of six years. For others, like compound semiconductors, sensor fabs, etc, fiscal support of 30% will be offered.
Over and above these, the government will offer design-linked incentives of up to 50% of eligible expenditure and product deployment-linked incentives of 6% – 4% on net sales for five years. Support will be provided to 100 domestic companies of semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs), systems & IP cores and semiconductor-linked design.
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