Union Cabinet Announces Rs 76,000 Crore Incentives For Semiconductors

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Union Cabinet announces Rs 76,000 crore incentives for semiconductors
Union Cabinet announces Rs 76,000 crore incentives for semiconductors

By 2025, India’s electronics system market is predicted to have grown by 2.3 times to $160 billion.

Approximately the next six years, the Union Cabinet has approved a production-linked incentive programme (PLI) worth over Rs 76,000 crore for semiconductor production.

Producers can receive up to 25% of their capital invested back under the PLI system.
Foxconn, Tata, and Tower semiconductor are among the companies that have expressed interest.
This is in reaction to the global shortage of semiconductors.

The timing’s right?

Though expected, the development comes at a time when the country’s auto sector, like its worldwide peers, is experiencing a severe semiconductor shortage. As a result, several OEMs have reduced output, resulting in a failure to satisfy anticipated demand, particularly in the passenger car category.

The plan calls for businesses to receive up to a 25% tax break on capital investments in compound semiconductor wafer production, assembly, testing, and packaging facilities. During a press conference, Telecom and IT Minister Ashwini Vaishnaw said the scheme will help over 100 local enterprises in the sectors of semiconductor design circuits and chipsets, as well as teach over 85,000 semiconductor engineers to create a full ecosystem. In addition, the proposal includes a design-linked incentive (DLI), for which the government would cover roughly half of the cost.

Foxconn, Tower Semiconductor, and Tata Group, among other global and Indian corporations, have expressed great interest in establishing semiconductor plants in India.

According to an RTI response received by Autocar Professional earlier this year, the Department of Electronics & Information Technology (MeitYExecutive )’s Committee has recommended 13 of the 34 applications filed for electronic component and semiconductor manufacture. Some of the leading local and international firms that appear in the recommendation are PICL, Hical Technologies, IFB Industries, Tata Electronics, Salcomp Technologies, Continental Device, Panacea Medical Technologies, Deki Electronics, and Tibrewala Electronic.

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Future of the Indian Electronics Market

According to a survey released by the Indian Electronic and Semiconductor Association, India’s electronics system market is predicted to increase 2.3 times its current size and reach $160 billion by 2025. (IESA).

“The approval of a Rs 76,000 crore PLI programme for semiconductors, including Rs 2.3 lakh crore in incentives, is a positive move,” said Sanjay Gupta, MD of NXP India. “India will be able to become an electronics hub as a result of this, and corporations will be encouraged to begin manufacturing in India.” Putting India on the world map of the semiconductors sector is a significant step forward since it will pave the way for the industry to expand its research, manufacturing, and export horizons. Issues such as a sudden rise in semiconductor demand will be resolved in the long run. This decision will also help Indian firms compete on a global scale, attracting investment in key competencies and cutting-edge technology.”

“I thank the Prime Minister and the government of India for today’s momentous decision to give $10 billion support to grow semiconductors and display manufacturing in India,” said Baba Kalyani, chairman and MD of Bharat Forge. In the digital and Industry 4.0 era, this strategic and ground-breaking effort will build the groundwork for a much-needed indigenous and integrated electronic design and manufacturing ecosystem — the backbone of any developed economy. I am optimistic that this will now begin a longer-term transformation of India into an innovation-driven economy with an emphasis on high-end capabilities, skills, and value creation!”

The timing of this strategy couldn’t have been better, with the semiconductor crisis wreaking havoc on automakers. Leave your thoughts in the comments section below.

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