Semiconductor Policy

The government is planning to provide incentives worth Rs 76,000 crore towards setting up over 20 semiconductor design, components manufacturing and display fabrication units over the next six years, in a bid to make India a hub for electronics.

“Through various PLI (production linked incentive) schemes, the Centre has tried to broaden the scope of manufacturing and export from India while the semiconductor policy will help deepen India's manufacturing base,” a senior government said.

The government’s target includes one to two fab units for displays, and 10 units each for designing and manufacturing components, officials added. Semiconductors are used for making a wide range of products ranging from automobiles to handsets.

The scheme is likely to go to Cabinet next week for approval and after that, the ministry of electronics & IT (MeitY) would work out the granular details and invite applications.

“…(after the Cabinet approval), the final contours of the policy will be drawn later and advertised, seeking interest from companies to invest,” another official said.

“The world has been reeling under the shortage of semiconductor chips affecting production targets across almost all industries. Since everything — from cars to TVs, laptops, earbuds, and even washing machines — use semiconductors, the policy is coming at the right time and the right place,” said Kanishka Chauhan, principal research analyst at Gartner. “If the policy can lure some of the foundries (fabrication units) to our country, it would go a big way in making our country self-reliant”.

A wafer is designed and manufactured in fabs, also called foundries, by companies such as Taiwan Semiconductor Manufacturing Company as per the requirements of chip manufacturers like Samsung, NXP and Qualcomm.

The chipmakers then package, test and sell the chips to equipment manufacturers such as Xiaomi and Cisco.

The government’s move comes nearly a year after it invited companies to express their interest and requirements for setting up semiconductor fab units.

Previous attempts to lure companies had failed despite the government offering a capital subsidy of as much as 40%. But officials say a lot has changed, especially on the infrastructure front.

New Delhi’s move also comes amid continuing global shortage of chips, which has affected the auto, smartphone and white goods industries in India in a big way as well.

Experts say that with countries like the US doling out huge subsidies to attract semiconductor manufacturers, India should act fast. Korean giant Samsung recently decided to set up a $17 billion chip-making factory in Texas, US.

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