India okays $10 bn scheme for development of semiconductor

India government has approved a program for the development of semiconductors and display manufacturing ecosystem in India with an outlay of Rs 76,000 crore (>10 billion USD).
China semiconductor industryIndia will offer attractive incentive to companies in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT), Semiconductor Design, etc.

“While this initiative may ameliorate the situation in the medium term, this is even better in the long term as this would spur the semiconductor manufacturing segment. That would provide opportunities both for import substitution and export propulsion,” PN Sudarshan, Partner and TMT Industry Leader, Deloitte India, said.

The PLI scheme for setting up of semiconductor fabs and display fabs in India shall extend fiscal support of up to 50 percent of project cost to applicants.

India Government will work 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.

Union Cabinet has also approved that Ministry of Electronics and Information Technology will take steps for modernization and commercialization of Semi-conductor Laboratory (SCL). MeitY will explore the possibility for the joint venture of SCL with a commercial fab partner to modernize 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 will extend fiscal support of 30 percent 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.

The Design Linked Incentive (DLI) Scheme will extend product design linked incentive of up to 50 percent of eligible expenditure and product deployment linked incentive of 6 percent – 4 percent 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.

India announced incentives for every part of supply chain including electronic components, sub-assemblies, and finished goods. Incentive support to the tune of Rs 55,392 crore (7.5 billion USD) 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 (USD 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 230,000 crore (USD 30 billion) to position India as global hub for electronics manufacturing with semiconductors as the foundational building block.

“The approval of Rs 76,000-Cr Product-Linked Incentive (PLI) scheme for Semiconductors under which Rs 2.3 Lakh crore of incentives will be given is a welcome move. This will enable India to become an electronics hub and encourage corporates to start manufacturing in India,” Sanjay Gupta, Managing Director, NXP India, said.