The Union Cabinet on Wednesday approved the comprehensive programme for the development of a sustainable semiconductor and display ecosystem in the country.
The cabinet has cleared the INR 76,000 crore programme, which 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 for modern electronics driving the next phase of digital transformation under Industry 4.0.
Semiconductors and display manufacturing is a complex and technology-intensive sector involving substantial 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 semiconductor 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), semiconductor design.
The broad incentives that have been approved for the development of semiconductors and display manufacturing ecosystem in India include:
Semiconductor Fabs, Display Fabs
The scheme for setting up of semiconductor fabs and display fabs in India shall extend financial support of up to 50% of project cost on a 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 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.
Semi-conductor Laboratory (SCL)
Union Cabinet has also approved that the Ministry of Electronics and Information Technology (MeitY) will take requisite steps for the modernisation and commercialisation of SCL. MeitY will explore the possibility for the joint venture of SCL with a commercial fab partner to modernise the brownfield fab facility.
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 financial support of 30% of capital expenditure to approved units.
At least 15 such compound semiconductors and semiconductor packaging units 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. In addition, 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 INR 1,500 crore in the coming five years.
India Semiconductor Mission
In order to drive the long-term strategies for developing a sustainable semiconductors and display ecosystem, a specialised and independent ‘India Semiconductor Mission (ISM)’ will be set up. The ISM will be led by global experts in the semiconductor and display industry. It will act as the nodal agency for efficient and smooth implementation of the semiconductors and display ecosystem schemes.
Comprehensive Fiscal Support For Semiconductors, Electronics
With the approval of the programme for developing semiconductors and display manufacturing ecosystem in India with an outlay of INR 76,000 crore (> $ 10 billion USD), the government of India has announced incentives for every part of the supply chain, including electronic components, sub-assemblies, and finished goods.
Incentive support to the tune of INR 55,392 crore ($ 7.5 billion) have been approved under PLI for Largest 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 INR 98,000 crore ($ 13 billion) are approved for allied sectors comprising ACC battery, auto components, telecom & networking products, solar PV modules and white goods. In total, the government has committed support of INR 2,30,000 crore ($ 30 billion) to position India as a global hub for electronics manufacturing with semiconductors as the foundational building block.
In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to critical information infrastructure security. The approved programme will propel innovation and build domestic capacities to ensure the digital sovereignty of India. It will also create highly skilled employment opportunities to harness the country’s demographic dividend.
Development of semiconductor and display ecosystem will have a multiplier effect across different sectors of the economy with deeper integration to the global value chain. As a result, the programme will promote higher domestic value addition in electronics manufacturing and contribute significantly to achieving a $1 trillion digital economy and a $5 trillion GDP by 2025.