Rs 76k cr boost ! India to ‘make chips’ fall in place

We will be a global leader in hi-tech manufacture: Vaishnaw

New Delhi: All set to position India as a global leader in hi-tech manufacturing, the Union Cabinet approved a Rs 76,000 crore policy boost for a semiconductor and display manufacturing ecosystem. The government expects investments of around Rs 1.7 lakh crores and the creation of 1.35 lakh jobs in the next four years, under the incentive scheme, Union Minister Ashwini Vaishnaw.

“We expect investment of around Rs 1.70 lakh crore in the next four years. There are proposals already in the pipeline. We expect projects for compound semiconductors to roll out in the next 3-4 months, the IT and Communications Minister said, after the Cabinet meeting. “In the medium term of two to four years, four big semiconductor fabrication plants will be in place.”

The announcement comes during a global shortage of electronic chips and many semiconductor companies are expanding their capacities. Vaishnaw said the Rs 76,000 crore incentive plan is only the beginning for setting up the semiconductor ecosystem in the country, in keeping with PM Narendra Modi’s 20-year vision to make India a hub of the electronics chip industry.

Tata Group has already announced its intention to foray into semiconductor manufacturing. Sources said that a Vedanta Group firm is also likely to set up a semiconductor manufacturing plant in India.

According to Ministry of Electronics and IT (MeitY) 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.

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

Vaishnaw said the government expects a total of 100 companies to be in place to take benefit of the scheme in the next four years.

According to Vaishnaw, the ‘Programme for Development of Semiconductors and Display Manufacturing Ecosystem’ will create 35,000 highly skilled jobs and one lakh indirect jobs in the country.

This is the third attempt by the government to woo semiconductor companies.

Vaishnaw said that earlier the electronics manufacturing ecosystem in the country was negligible, but it has reached Rs 5.33 lakh crore in 2020-21. The sector is expected to cross Rs 22 lakh crore in the next five years. “We now have all the elements in place to make this scheme a success,” Vaishnaw said.

A MeitY official said the scheme has been designed after rectifying mistakes done in the past and the Centre will make matching investments with the chip manufacturing companies so that they are not required to wait for financial incentives from the government.

Under the scheme, 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 fabrication units (fabs) and two display fabs in the country.

MeitY will take requisite steps for modernisation and commercialisation of Semi-Conductor Laboratory (SCL). The IT ministry will explore the possibility of a joint venture of SCL with a commercial fab partner to modernise the brownfield fab facility.

A Design Linked Incentive (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.

Under the scheme, support will be provided to 100 domestic companies of semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs) and semiconductor linked design.

The scheme envisages facilitating the growth of not less than 20 such companies which can achieve a turnover of more than Rs 1,500 crore in five years. The minister said the scheme also targets creating 85,000 highly skilled engineers in partnership with top 60 institutes to meet manpower requirements of the semiconductor industry.

With a view to driving the longterm strategies for developing a sustainable semiconductors and display ecosystem, a specialised and independent ‘India Semiconductor Mission (ISM)’ will also be established.