The Union Cabinet on Wednesday has cleared the Rs 76,000-crore incentive scheme for semiconductors, paving a way to make India a hub for electronic system design and manufacturing. Under this initiative, the Centre plans to set up over semiconductor design, components manufacturing, and display fabrication (fab) units in India over the next few years. The Centre has announced incentives for every part of supply chain including electronic components, sub-assemblies, and finished goods. The move came at a time when global semiconductor shortage has severely affected various industries across the world.
Union ministers Anurag Thakur and Ashwani Vaishnav announced the decision after the Cabinet meeting headed by Prime Minister Narendra Modi. “The government has decided to set up a complete ecosystem for semiconductors in the country. It will include design, fabrication, packaging, testing,” Vaishnav said.
The Union cabinet had decided to help semiconductor manufacturing in many ways — extend fiscal support of up to 50 per cent of project cost on pari-passu basis to applicants who are found eligible and have the technology as well as capacity to execute such highly capital intensive and resource incentive projects.
“The central government will work closely with the state governments establish high-tech clusters with requisite infrastructure in terms of land, semiconductor grade water, high quality power, logistics and research ecosystem to approve applications for setting up at least two greenfield semiconductor fabs and two display fabs in the country,” the Cabinet said.
Cabinet has approved that ministry of electronics and information Technology will take requisite steps for modernization and commercialisation of Semi-conductor Laboratory (SCL). MeitY will explore the possibility for the joint venture of SCL with a commercial fab partner to modernise the brownfield fab facility.
The scheme for setting up of compound semiconductors/silicon photonics/sensors (including MEMS) fabs and semiconductor ATMP / OSAT facilities in India shall extend fiscal support of 30 per cent of capital expenditure to approved units. Atleast 15 such units of compound semiconductors and semiconductor packaging are expected to be established with government support under this scheme.
“The Design Linked Incentive (DLI) Scheme shall extend product design linked incentive of up to 50 per cent of eligible expenditure and product deployment linked incentive of 6 per cent to 4 per cent 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 and facilitating the growth of not less than 20 such companies which can achieve turnover of more than Rs 1,500 crore in the coming five years,” the Cabinet said.
The Centre also had plans to set up two fab units for semiconductor displays, and 10 units each for designing and manufacturing components. This PLI scheme will help to deepen India’s manufacturing base.
Once the Cabinet approves the scheme, the Ministry of Electronics and Information Technology (MeitY) will work out the details. With this mega incentive, the government is planning to attract the top semiconductor manufacturers such as Mediatek, Intel, Qualcom, Samsung and Texas Instruments.
“Incentive support to the tune of Rs 55,392 crore have been approved under PLI for Larges Scale Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme. In addition, PLI incentives to the quantum of Rs 98,000 crore ($13 billion) are approved for allied sectors comprising of ACC battery, auto components, telecom & networking products, solar PV modules and white goods. In total, Government of India has committed support of Rs 2,30,000 crore ($30 billion) to position India as global hub for electronics manufacturing with semiconductors as the foundational building block,” the Cabinet said.
This much-needed incentive by the central government can help India to become an electronics hub, especially amid ongoing global semiconductor shortage crisis. “The program will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design,”
Semiconductors are the key components used in manufacturing various kinds of electronic devices including smartphones, laptops, cars and other appliances and vehicles. The shortage has affected smartphones, personal computers, game consoles, automobiles, and medical devices.
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