Government Floats EOI For Setting Up Electronic Chip Plants In India, Acquisitions Overseas

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  • The expression of interest floated by the Ministry of Electronics and Information Technology (Meity) said that the Government of India is keen to incentivise and attract investment in setting up of Semiconductor FABs in India
  • Meity has fixed January 31, 2021 as the last date for submitting the proposal

The Indin government has invited proposals from entities to set up electronic chip manufacturing units in the country and even acquire any company making semiconductors overseas. . The expression of interest floated by the Ministry of Electronics and Information Technology (Meity) said that the Government of India is keen to incentivise and attract investment in setting up of Semiconductor FABs in India.

The EOI document says, “The Ministry of Electronics and Information Technology (MeitY) invites Expression of Interest (EoI) from companies / consortia desirous of setting up / expansion of existing Semiconductor wafer / device fabrication (FAB) facilities in India or acquisition of Semiconductor FABs outside India.” Meity has fixed January 31, 2021 as the last date for submitting the proposal.

Setting up or expansion of existing semiconductor plants in the country

As per the document, the government plans to use the proposals to formulate a scheme for setting up or expansion of existing semiconductor plants in the country. It adds that this assumes significance in view of the fact that India is poised to increase its share in global manufacturing of Mobile Phones, IT Hardware, Automotive Electronics, Industrial Electronics, Medical Electronics, IoT and other devices in the near future as it aspires to have $400 billion of electronics manufacturing by the year 2025.

The document also says that Semiconductor manufacturing is a complex and research-intensive sector, defined by rapid changes in technology which require significant and sustained investment. Semiconductors are also at the heart of electronic products and constitute a significant part of the total value of Bill of Material (BOM).

Lack of a robust electronic components and semiconductor manufacturing ecosystem in India

The EOI document says, “Electronics manufacturing in India has increased substantially over the last few years and is steadily moving up the value chain from Semi Knocked Down (SKD) to Completely Knocked Down (CKD) stage of manufacturing. However, domestic value addition is estimated to be in the range of 15 per cent – 20 per cent only, and growth in manufacturing so far has primarily been on account of final assembly / Printed Circuit Board Assembly (PCBA) using imported components/ sub-assemblies, parts, etc. This is due to the lack of a robust electronic components and semiconductor manufacturing ecosystem in India despite the fact that the country has a thriving Fabless Design ecosystem.”

The government had approved two semiconductor units in 2013 with an investment of around Rs 63,000 crore. They could not be set up due to lack of electronics manufacturing ecosystem in the country and policy-linked market support.

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