In furtherance of the vision of Aatmanirbhar Bharat and positioning India as the global hub for Electronics System Design and Manufacturing, the Cabinet approved the comprehensive program for the development of sustainable semiconductor and display ecosystem in the country with an outlay of Rs.76,000 crore (>10 billion USD). The programme 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. This shall pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance.
Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0. Semiconductors and display manufacturing is very complex and technology-intensive sector involving huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology, which require significant and sustained investments. The programme will give an impetus to semiconductors and display manufacturing by facilitating capital support and technological collaborations.
The programme aims to provide attractive incentive support to companies / consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT) and Semiconductor Design.
Following broad incentives have been approved for the development of semiconductors and display manufacturing ecosystem in India:
- The government has 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
Main Objective
- To attract large investments for setting up semiconductor wafer fabrication facilities in
the country to strengthen the electronics manufacturing ecosystem and help establish a trusted
value chain.
Implications perceived
- 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
- 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.
The Schemes for Setting up of Semiconductor Fabs and Display Fabs in India shall extend fiscal support of up to 50% 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 and resource intensive projects. Government of India will work closely with the State Governments to 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.
Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT Units: 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% of capital expenditure to approved units. At least 15 such units of Compound Semiconductors and Semiconductor Packaging are expected to be established with Government support under this scheme.
Semiconductor Design Companies: The Design Linked Incentive (DLI) Scheme shall 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. 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.1500 crore in the coming five years.
Key benefits
- Domestic electronics manufacturing has increased substantially over the last few years and is steadily moving from the Semi Knocked Down (SKD) to the Completely Knocked Down (CKD) stage of manufacturing.
- However, domestic value addition is estimated to be in the range of 10% – 30% only, and growth in manufacturing so far has primarily been on account of final assembly using imported components, sub-assemblies / parts, etc.
- 1.7 Semiconductor supply chains are marked by geographical specialisation with 75% of global manufacturing capacity in East Asia. Geographic specialisation creates vulnerabilities emerging due to natural disasters, infrastructure shutdowns or geopolitical events. Therefore, it is critical to develop secure and resilient semiconductor supply chains for industrial growth, digital sovereignty, and technological leadership.
This new move of the government would nurture the companies to come and invest in India like Intel has announced for investing in semiconductor plant in India. 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.
We all hope that this incentive scheme is a progressive step and provides a much-needed boost to establish a holistic ecosystem in India.
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