Govt approves Rs 76,000-cr plan for semiconductor, display manufacturing

The government on Wednesday approved a Rs 76,000-crore scheme to boost semiconductor and display manufacturing in the country in an bid to position India as a global hub for hi-tech production, and attract large chip makers.

The move would further India's ambitions to be self-reliant in electronics manufacturing, bring massive investments and result in 35,000 specialised jobs apart from indirect employment for one lakh people.

In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure.

The semiconductor scheme also comes at a time when the world is witnessing a severe crunch of semiconductors, a key component used in cars to electronic devices. The supply has been disrupted as a result of the COVID-19 pandemic, which forced many production centres to close intermittently.

Announcing the decision of the Cabinet, IT and Telecom Minister Ashwini Vaishnaw said the Rs 76,000-crore scheme has been approved for development of semiconductors and display manufacturing ecosystem.

Incentives have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensors fabs, semiconductor packaging and semiconductor design.

"Today's historic decision will boost development of complete semiconductor ecosystem, ranging from design, fabrication, packaging, and testing," Vaishnaw said.

With the semiconductor incentive scheme in place, the government expects investments of around Rs 1.7 lakh crore and 1.35 lakh jobs in the next four years, he added.

The government is looking at least two greenfield semiconductor fabs and two display fabs in the country, while at least 15 units of Compound Semiconductors and Semiconductor Packaging are expected to be established with government support under this scheme.

Under Design Linked Incentive (DLI) scheme, 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.

The DLI scheme will offer incentive of up to 50 per cent of eligible expenditure and product deployment linked incentive of 6-4 per cent on net sales for five years.

An independent 'India Semiconductor Mission (ISM)' will be set up to drive the long-term strategies for developing a sustainable semiconductors and display ecosystem in the country.

The new mission will be led by global experts in semiconductor and display industry, and will act as the nodal agency for efficient and smooth implementation of the scheme.

India is looking to push electronics manufacturing to USD 300 billion in coming six years from USD 75 billion now, and semiconductor chips are a crucial part of that ecosystem.

The scheme charts out a plan for skilling and training of 85,000 high-quality engineers, and works out a roadmap for next 20 years.

Tata Group has already announced its intention to foray into semiconductor manufacturing. Sources told PTI that a Vedanta Group firm will again make investment to set up a semiconductor manufacturing plant in India.

According to the Ministry of Electronics and IT sources, two big electronics chip companies and two display manufacturing units each entailing investments in the range of Rs 30,000-50,000 crore are expected to be set up within the next four years.

Further, 20 companies comprising chip packaging firms, compound semiconductors which make chips for automotive sector, power equipment etc are expected to be operational in three years with investments in the range of Rs 3,000 crore to Rs 5,000 crore.

The scheme for setting up of Semiconductor Fabs and Display Fabs in India will extend fiscal support of up to 50 per cent of project cost to eligible applicants.

The Centre will work closely with the state governments on high-tech clusters with requisite infrastructure in terms of land, semiconductor grade water, 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 IT Ministry will take steps for modernisation and commercialisation of Semi-Conductor Laboratory (SCL). It 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 fabs and Semiconductor ATMP / OSAT facilities in India shall extend fiscal support of 30 per cent of capital expenditure, to approved units," an official release said.

Industry body ICEA Chairman Pankaj Mohindroo termed it a "profound decision" and said building blocks of the electronic ecosystem -- Cells, display and the semiconductor ecosystem are critical for long term sustenance.

"We would not call this a production subsidy but a very important investment in our tryst with 'Atmanirbharta'," he said.

IT association Nasscom said that incentive scheme is a progressive step and provides a much-needed boost to establish a holistic ecosystem in India.

According to Satya Gupta, Advisor-India Electronics and Semiconductor Association: "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".