Policy For Setting Up Semiconductor Fabs in India Under Works

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  • The government of India might pay 50 per cent of overall cost of setting up a semiconductor fab in the country
  • Currently, electronics manufacturer in India, rely on imported semiconductors
  • Reliance Group has shown interest in semiconductors manufacturing recently
  • China is one of the largest semiconductor manufacturing countries in the world

The recently announced Production-Linked-Incentive scheme for locally manufacturing mobile phones and components might have suggested towards the Government of India’s aim to make the country self-sufficient when it comes to electronics. Now, if sources we spoke to are to be believed than the GOI is also working on a policy that will help set up semiconductor fabs here.

“Semiconductor policy is being worked upon at the moment. Suggestions from industry have been taken and the scrutiny of everything suggested is going on. India might see announcement of a semiconductor policy within a years time,” said an individual on terms of anonymity.

Policy might include 50 per cent cost of setting up a semiconductor fab

The policy under works includes GOI paying up to 50 per cent of the overall cost spent on setting up a semiconductor fab. Additionally, 25 per cent more might be given as a soft loan to firms setting up semiconductor fabs in India.

However, the policy might change shape with time as the cost involved might be too high. In a recent report, Electronics B2B had quoted Taiwan based semiconductor firm TMIC pointing out towards setting up a semiconductor fab as atleast a $1 billion investment.

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“While the cost of setting up a semiconductor fab is high, the benefits offered by it in the long-term are enormous. Not only will it help do more value-addition in the locally produced electronics, it will also increase India’s revenue from exports,” said the individual.

Reliance had shown interest in semiconductor manufacturing

Reports by several India-based newspapers and portals had earlier said that Reliance and Videocon were ready to invest Rs 18,000 crore and Rs 25,000 crore in setting up semiconductor fabs.

These reports, dating back to as far as year 2008 has also quoted Venugopal Dhoot, chairman, Videocon Group, saying that he has requested the GOI to offer protection from imports of such products. He had also mentioned about subsidies on setting up semiconductor fabs.

The Finance Ministry of India, in 2013, has also announced zero custom duty on import of plant and machinery for semiconductor facilities. However, nothing that could called a substantial development took place back then.

Hindustan Semiconductor Manufacturing Corporation (HSMC), a consortium of companies that included STMicroelectronics and Silterra Malaysia were also aiming to start chip manufacturing plant in Gujarat through a project worth Rs 30,000 crore. However, the government in 2019, had cancelled the letter of intent granted to this consortium.

Similarly, another consortium led by Jaiprakash Associates that included IBM and Tower Semiconductor of Israel was to start chip manufacturing in UP. Jaiprakash Associates had pulled out of the Rs 34,000-crore investment in 2016.

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