Cabinet clears Rs 76,000-crore plan for semiconductors

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The Union Cabinet on December 15 cleared a Rs 76,000 crore scheme for semiconductors aimed at making India a global electronics hub as a shortage of microchips hurts industrial production.

The government proposes to provide incentives worth Rs 76,000 crore for the development of semiconductors and display manufacturing ecosystemsem over the next six years.

“The programme 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. This shall pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance,” the government said in a statement.

Under the plan, the government would extend fiscal support of up to 50 percent of a project’s cost to eligible display and semiconductor fabricators.

The move would bring massive investments and result in 35,000 specialised jobs apart from indirect employment for one lakh people, it said.

"Today's historic decision will boost development of complete semiconductor ecosystem, ranging from design, fabrication, packaging, and testing," IT and telecom minister Ashwini Vaishnaw said while announcing the decision.

The government would work closely with the states to 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, it said.

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

The government is looking at least two greenfield semiconductor fabs and two display fabs in the country, while at least 15 units of Compound Semiconductors and Semiconductor Packaging are expected to be established with government support under this scheme.

"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," a CNBC Awaaz report added.

Israel’s Tower Semiconductor, Taiwan’s Foxconn and a consortium from Singapore have shown interest in setting up chip factories while Vedanta Group was keen to set up a display plant, news agency Reuters quoted sources as saying.

With PTI inputs

(Note to readers: The article has been updated after the ministry of electronics & IT clarified that it launched a package for the development of semiconductors and display manufacturing ecosystem in the country and not a production linked incentive scheme.)