Government Could Increase Funding For Indian Semiconductor Mission

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ISM currently provides fiscal support of up to 50% of the project cost for setting up semiconductor manufacturing, packaging, and design units.

The Ministry of Electronics & IT (MeitY) is considering increasing the funding for the Indian Semiconductor Mission (ISM) scheme from the current ₹76,000 crore due to its growing global popularity. S Krishnan, Secretary of MeitY, said that they could increase funding when it is exhausted to bring in more fabs in the country.

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The government aims to establish 2-3 more semiconductor fab units in India in the next 2-3 years, recognising that fabs are capital-intensive and require significant patient capital. The ISM scheme, launched in 2021 by Prime Minister Narendra Modi’s government, provides fiscal support of up to 50% of the project cost to approved applicants for setting up semiconductor manufacturing, packaging, and design units.

India has a strong capability in chip design, and with these new units, it aims to develop capabilities in chip fabrication and advanced packaging technologies indigenously. The semiconductor scheme has attracted multiple large-sized multinationals, potentially establishing a semiconductor ecosystem in India that could challenge the dominance of China and Taiwan in the long term.

The Cabinet recently approved three semiconductor units in India, including two plants by the Tata Group. The Tata Group is setting up a semiconductor chip fabrication facility in Gujarat in collaboration with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) with an investment of ₹91,000 crore and a production capacity of 50,000 wafer starts per month (WSPM). Tata Semiconductor Assembly and Test Private Limited (TSAT) plans to establish a semiconductor unit in Assam’s Morigaon with an investment of ₹27,000 crore.

The Cabinet also approved the proposal of US-based Micron Technology to set up a semiconductor unit in Sanand, Gujarat. CG Power, in partnership with Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics, will also establish a semiconductor facility with an investment of ₹7,600 crore.

The government expects these units to create at least 20,000 direct employment opportunities in advanced technology areas and nearly 60,000 indirect jobs.

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