Rs 76,000 Cr Incentive Scheme For Semiconductors & Displays Approved

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“In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure”

The Union Cabinet has approved the comprehensive program for the development of sustainable semiconductor and display ecosystem in the country. The program, as per the government, 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.

“Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0. Semiconductors and display manufacturing is very complex and technology-intensive sector involving huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology, which require significant and sustained investments. The program will give an impetus to semiconductor and display manufacturing by facilitating capital support and technological collaborations,” read a note released by the government.

In order to drive the long-term strategies for developing a sustainable semiconductors and display ecosystem, a specialized and independent “India Semiconductor Mission (ISM)” will be set up. The India Semiconductor Mission will be led by global experts in semiconductor and display industry. It will act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.

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. Union Cabinet has also approved that Ministry of Electronics and Information Technology will take requisite steps for modernization and commercialization of Semi-conductor Laboratory (SCL). MeitY will explore the possibility for the Joint Venture of SCL with a commercial fab partner to modernize the brownfield fab facility.

“This is first time government is providing significant incentives for Semiconductor product Design called Design Linked Incentives (DLI) giving incentives for product development and product deployment to create Indian chips level products. The year-long effort by the Meity team in consultation with Invest India, other ministries, Domestic & Global industry and Academia has resulted in a policy covering all aspects of the industry and has the required depth of understanding of the global ecosystem,” noted Dr Ajai Chowdhry, Founder HCL.

“We are very pleased that Governments of India has come out with a comprehensive and progressive policy addressing Semiconductor Product Design, Manufacturing and Research with INR 76,000 Cr. ($10 Billions) allocation. The focus on Silicon Logic Fab, Display Fab, Compound Semiconductors Fab, packaging, Semiconductor-products-design and Research will help in creating a vibrant and sustainable ecosystem in India leveraging the already existing semiconductor design capabilities,” Satya Gupta, Advisor-India Electronics & Semiconductor Association.

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.

Government of India will work closely with the State Governments 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.

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 fiscal support of 30 per cent of capital expenditure to approved units. Atleast 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 six to four 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 1500 crore in the coming five years.

“In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure. The approved program 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 demographic dividend of the country,” read the government’s official press note.

It continued, “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. The program will promote higher domestic value addition in electronics manufacturing and will contribute significantly to achieving a USD 1 Trillion digital economy and a USD 5 Trillion GDP by 2025.”

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