Cabinet to consider Rs 76,000-crore PLI scheme for semiconductor production today

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The Cabinet is likely to consider a production linked incentive (PLI) scheme for semiconductor production for approval at a meeting due to begin at 1 pm on Wednesday as a shortage of microchips hurts industrial production and with the ambition of making the country an electronics hub.

The government proposes to provide incentives worth Rs 76,000 crore for semiconductor production over the next six years, people aware of the development told CNBC Awaaz.

"The scheme will include provision for 25 percent incentives on capital expenditure for establishing unit of Compound Semiconductor Wafer Fabrication (Fab), assembly, testing, and packaging facility," one person was quoted as saying.

The scheme also includes incentives for start-ups to design and develop semiconductors.

The proposed scheme envisions investments of Rs. 1.7 lakh crore by industry, CNBC-TV18 reported.

The government is hoping to attract interest from global firms like Mediatek, Intel, Qualcomm and Texas Instruments.

The Centre plans to set up two fab units for semiconductor displays, and 10 units each for designing and manufacturing components, a move aimed at enabling India to become an electronics hub.

The policy comes at a time when the world is witnessing a severe crunch of semiconductors, a key component in all types of electronic devices. The supply has been disrupted as a result of the COVID-19 pandemic, which forced production centres to close intermittently.

The worldwide shortage is currently affecting major industries like smartphones, laptops, cars, appliances and more.

Many corporations across industries have reported a decline in production and sales due to the shortage of chips. Global car output has also been held back in recent months due to the shortages.