The government approved a Rs 76,000 crore programme on Wednesday to increase semiconductor and display manufacturing in India, in an effort to establish the country as a worldwide centre for hi-tech production and attract large chip companies.
The action will help India achieve its goal of becoming self-sufficient in electronics manufacturing by attracting significant investments and creating 35,000 specialised jobs, in addition to one lakh indirect jobs.
Trusted suppliers of semiconductors and displays are important to the security of vital information infrastructure in the present geopolitical environment.
The semiconductor plan also comes at a time when semiconductors, a critical component used in everything from autos to electrical gadgets, are in short supply throughout the world. The COVID-19 pandemic has disrupted supplies, forcing many industrial centres to shut down for short periods of time.
IT and Telecom Minister Ashwini Vaishnaw announced the Cabinet’s decision, saying the Rs 76,000-crore initiative would be used to enhance the semiconductor and display manufacturing ecosystem.
Companies involved in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging, and semiconductor design have been offered incentives.
“Today’s historic decision will accelerate the development of the whole semiconductor ecosystem, including design, manufacturing, packaging, and testing,” said Vaishnaw.
The government anticipates investments of roughly Rs 1.7 lakh crore and 1.35 lakh jobs in the next four years as a result of the semiconductor incentive plan, he said.
At least two greenfield semiconductor fabs and two display fabs are scheduled to be built in the country, with at least 15 units of compound semiconductors and semiconductor packaging expected to be developed with government assistance under this programme.
Support will be granted to 100 domestic semiconductor design businesses for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems and IP Cores, and semiconductor linked design under the Design Linked Incentive (DLI) plan.
The DLI plan will provide an incentive of up to 50% of qualifying spending and a product deployment-linked reward of 4–6% of net sales over a five-year period.
An autonomous “India Semiconductor Mission (ISM)” would be established to promote long-term plans for the country’s development of a sustainable semiconductor and display ecosystem.
The new mission, which will be directed by international specialists in the semiconductor and display industries, will serve as the nodal agency for the scheme’s effective and seamless execution.
India aims to increase electronics manufacturing from $75 billion to $300 billion in the next six years, and semiconductor chips are an important element in that ecosystem.
The plan lays out a strategy for educating and training 85,000 high-quality engineers over the next 20 years, as well as a 20-year roadmap.
Tata Group has previously said that it intends to enter the semiconductor manufacturing industry. According to PTI, a Vedanta Group company will invest in a semiconductor manufacturing factory in India once again.
Two large electronics chip firms and two display manufacturing plants, each worth Rs 30,000-50,000 crore, are anticipated to be established over the next four years, according to Ministry of Electronics and IT sources.
In addition, 20 enterprises with investments ranging from Rs 3,000 crore to Rs 5,000 crore are scheduled to be operational in three years, including chip packaging firms, compound semiconductors that create chips for the automotive industry, power equipment, and so on.
The plan for building up semiconductor fabs and display fabs in India would provide qualifying applicants with financial assistance of up to 50% of the project cost.
To approve applications for at least two greenfield semiconductor fabs and two display fabs in the country, the Centre will work closely with state governments on high-tech clusters with the necessary infrastructure in terms of land, semiconductor grade water, power, logistics, and research ecosystem.
The Ministry of Information Technology will take initiatives to modernise and commercialise the Semiconductor Laboratory (SCL). It will also look at the prospect of an SCL-commercial fab partner forming a joint venture to modernise the brownfield fab plant.
According to an official statement, “the Scheme for establishing compound semiconductors, silicon photonics, sensors fabs and Semiconductor ATMP/OSAT facilities in India will give fiscal assistance of 30% of capital expenditure to approved units.”
Pankaj Mohindroo, Chairman of the Industry Council for Electronics and Applications (ICEA), called it a “deep choice,” adding that the electronic ecosystem’s building pieces—cells, displays, and the semiconductor ecosystem—are vital for long-term survival.
He added, “We wouldn’t call this a production subsidy,” but it’s a critical investment in our relationship with “Atmanirbharta.”
The incentive plan, according to Nasscom, is a progressive move that offers a much-needed boost to India’s holistic ecosystem.
The focus on Silicon Logic Fab, Display Fab, Compound Semiconductors Fab, packaging, Semiconductor-products-design and research will help in creating a vibrant and sustainable ecosystem in India, leveraging the already existing semiconductor design capabilities, says Satya Gupta, Advisor-India Electronics and Semiconductor Association.
Source: Business Standard