• India
  • Dec 16

Cabinet clears Rs 76,000 crore incentive scheme for semiconductor production

• The Union Cabinet approved a Rs 76,000 crore policy boost for semiconductor and display manufacturing ecosystem in a bid to position India as a global hub for hi-tech production. 

• The announcement comes at a time when there has been a global shortage of electronic chips and many semiconductor companies are expanding their capacities.  

• The semiconductor programme is different from the production-linked incentive (PLI) scheme that the government has launched earlier. 

Scope of the programme

• The programme will promote higher domestic value addition in electronics manufacturing and will contribute significantly to achieving a $1 trillion digital economy and a $5 trillion GDP by 2025. 

• With the approval of the programme for development of semiconductors and display manufacturing ecosystem in India with an outlay of Rs 76,000 crore, the government has 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 have been approved under PLI for Large 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 are approved for allied sectors comprising ACC battery, auto components, telecom & networking products, solar PV modules and white goods. 

• In all, the government has committed support of Rs 2,30,000 crore to position India as global hub for electronics manufacturing with semiconductors as the foundational building block. 

• 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.

Components of the programme

The programme aims to provide attractive incentive support to companies / consortia that are engaged in silicon semiconductor fabrication units (fabs), display fabs, compound semiconductors / silicon photonics / sensors (including MEMS) fabs, semiconductor packaging, semiconductor design.

Semiconductor Fabs and Display Fabs: The scheme for setting up of semiconductor fabs and display fabs in India shall extend fiscal support of up to 50 per cent 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 intensive and resource incentive projects. 

The government will work closely with 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): The ministry of electronics and information technology (MeitY) will take requisite steps for modernisation and commercialisation of Semi-conductor Laboratory (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 Micro Electro Mechanical Systems) Fabs and Semiconductor ATMP/OSAT Units: This scheme shall extend fiscal support of 30 per cent 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 per cent of eligible expenditure and product deployment linked incentive of 4-6 per cent 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 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 India Semiconductor Mission 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 schemes on semiconductors and display ecosystem.

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