The government will soon put out a request for proposal document seeking formal applications from companies to set up semiconductor plants, senior officials said. The officials said several companies showed interest earlier this year to set up such fabs (fabrication units) and that the government would decide on the quantum of subsidy only after it receives specific proposals.
Setting up fabs is expensive and the subsidy is huge, so the government will be “careful” before giving approvals, the official added.
Tata Sons chairman N Chandrasekharan also recently spoke about the salt-to-software conglomerate’s plans to enter the semiconductor space, to reduce dependence on Chinese imports. A global shortage of chips - which has crippled several industries such as automobiles and electronics — due to the Covid-19 pandemic — has spurred many companies to diversify operations to newer locations.
The Ministry of Electronics and IT has not divulged the quantum of incentive it would provide companies. However, the government is believed to set aside $1 billion for a fab, which entails a total investment commitment of $2-$5 billion, or more. The official said 5G, data centres and semiconductors were the next areas of focus for the government, which has been successful in attracting companies to set up mobile phone manufacturing plants through incentive schemes over the past few years.
The government is open to setting up both traditional fabs as well as new-age ones like the Gallium Nitride semiconductor fabs, which are relatively cheaper to build.