India eyes first semiconductor fab with Rs 2,500 crore in fiscal backing, shows Outcome Budget

India plans to set up its first semiconductor fab unit in FY 2025-2026

India's semiconductor ambitions are gaining significant traction, with the government laying out plans to establish the country’s first full-fledged semiconductor fabrication (fab) facility, according to the Outcome Budget 2025-2026.

Under the Modified Programme for the Development of the Semiconductor and Display Manufacturing Ecosystem, the IT Ministry said that the government aims to provide fiscal support of Rs 2,500 crore for setting up the semiconductor fab.

The government in also expecting Rs 5,000 crore investment through this scheme with an employment generation of 100 personnel.

Under the Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem, the IT ministry said that to set up the semiconductor fab, the government is targeting providing fiscal support of Rs 2,500 crore.

The government in also expecting Rs 5,000 crore investment through this scheme with an employment generation of 100 personnel.

The Outcome Budget was released on February 15, weeks after the Finance Minister Nirmala Sitharaman announced the Union Budget.

Since 2017-18, the Budget document has included not just financial allocations for government schemes but also their expected results. These details are presented in a separate Outcome Budget, which outlines the planned spending, expected outputs, and measurable outcomes.

Apart from that Ministry of Electronics and Information Technology is also targeting set up six compound semiconductor fabs and funding for 20 chip design firms in for FY 2025-2026.

For the six compound/silicon photonics/sensors/discrete semiconductor fabs/ATMP units, the government is planning to disburse up to Rs 3,900 crore.

The move is expected to generate 1,200 jobs and investment of Rs 8,000 crore, the Outcome Budget said.

In the Union Budget, the government also ramped up its outlay for Production Linked Incentive (PLI) schemes for electronics, to Rs 9,000 crore. In this financial year, the government plans to disburse Rs 6,000 crore in incentives.

In the Outcome Budget, the government said that the PLI scheme for electronics is projected to bring Rs 8.12 lakh crore in incremental sales and Rs 7,000 crore in investments, creating over 2 lakh jobs.

Similarly, the IT hardware PLI is expected to drive sales of Rs 17,075 crore, reinforcing India's standing as a manufacturing hub, Outcome Budget said.

Companies approved under the PLI scheme are also expected to increase employment by 6,048 personnel.

Beyond semiconductors and PLI schemes, the Outcome Budget said that the schemes Promotion of Electronics & IT Hardware Manufacturing initiative, which includes the Modified Special Incentive Package Scheme (MSIPS), Electronics Manufacturing Clusters (EMC), and the Electronic Development Fund (EDF). aim to create 30,000 jobs and attract significant private investment.

While these allocations mark a substantial commitment, industry stakeholders are watching closely to see how these plans translate into execution.