Budget 2024: Rs 6,903 crores allocated for semiconductor and display manufacturing
The government had announced a $10 billion (Rs 76,000 crore) worth incentive scheme for semiconductor and display manufacturing ecosystem in December 2021.
- Feb 1, 2024,
- Updated Feb 1, 2024 2:32 PM IST
The union government of India has once again iterated its focus on developing India into a semiconductor nation. After making a non-planned allocation of Rs3,000 crore in the Union Budget 2023-24, the government has once again allocated Rs 6,903 crores in Budget 2024-25. This allocated amount will help in the development of semiconductors and display manufacturing ecosystems. The government had announced a $10 billion (Rs 76,000 crore) worth incentive scheme for semiconductor and display manufacturing ecosystem in December 2021.
Danish Faruqui, CEO of Fab Economics, a US based boutique semiconductor ecosystem consultancy with broad macroeconomics capabilities, told Business Today, “The high priority allocated in Union Budget 2024 to the Programme for Development of Semiconductor and Display manufacturing ecosystem in India is commendable as the semiconductor industry has long awaited such formidable and bold semiconductor commitments from India.”
According to Faruqui, in the 2023-24 Budget Rs 3000 crores was allocated for the Semiconductors and Display manufacturing incentive schemes and at that point of time, India’s positioning was more towards lower cost semiconductor manufacturing and lesser expectation on higher (an order of magnitude higher) cost Si based CMOS Fab. 2023-24 Budget allocated 1800 crores for Compound Semi / Display / ATMP / OSAT manufacturing and only 1000 crores for an order of magnitude higher capex intensive Si based CMOS Fab manufacturing along with 200 crores for Design part of the value chain.
Over the last two years, the government has not yet approved any fab (chip manufacturing) proposal since the announcement of the scheme. The big proposal approved is US memory chip Micron’s ATMP plant that will come up in Gujarat ($2.75 billion) in June 2023. Hence, Arun Mamphazy, independent semiconductor analyst believes most of the Rs 6,903 crore allocated is likely to go for Micron ATMP that is already approved.
Other than Micron, Israel’s Tower Semiconductor had resubmits proposal to set up 65 nm, 40 nm chip fab. Other than these two leading names in the chip ecosystem, now India companies including HCL, Tata Group and Hiranandani Group are also venturing into semiconductor ecosystem. HCL has entered into a joint venture with Taiwan’s Foxconn to setup an OSAT in India. On the other hand, Tata Group is working actively towards setting an OSAT and a foundry in the country.
But given the limited allocation, Mamphazy adds, “ it looks like we may still be far away from seeing approval for Silicon fabs despite applicants like Tower and interest shown by Tata, unless more money is allocated in the full budget of 2024 after election."
“Based on 2023 and 2024 budget allocations, it is expected that multiple projects across Semiconductor and Display manufacturing ecosystem will start and require Capex incentives allocation through 2024 as the GOI fiscal support is on a pari passu basis,” adds Faruqui.
The ministry of Electronics and IT and India Semiconductor Mission are currently evaluating the fab and packaging proposals. Sources at the ministry of IT and Electronics have told Business Today that the government is hopeful that India will soon have at least two fabs, and many testing and packaging plants in the next couple of years.
Given India’s focus on emerging into a semiconductor nation, this time around, India’s Union Budget 2024 was closely watched by the key stakeholders across the globe.
Also Read: Interim Budget 2024: Here’s the latest on income tax slabs and rates for new and old tax regimes
The union government of India has once again iterated its focus on developing India into a semiconductor nation. After making a non-planned allocation of Rs3,000 crore in the Union Budget 2023-24, the government has once again allocated Rs 6,903 crores in Budget 2024-25. This allocated amount will help in the development of semiconductors and display manufacturing ecosystems. The government had announced a $10 billion (Rs 76,000 crore) worth incentive scheme for semiconductor and display manufacturing ecosystem in December 2021.
Danish Faruqui, CEO of Fab Economics, a US based boutique semiconductor ecosystem consultancy with broad macroeconomics capabilities, told Business Today, “The high priority allocated in Union Budget 2024 to the Programme for Development of Semiconductor and Display manufacturing ecosystem in India is commendable as the semiconductor industry has long awaited such formidable and bold semiconductor commitments from India.”
According to Faruqui, in the 2023-24 Budget Rs 3000 crores was allocated for the Semiconductors and Display manufacturing incentive schemes and at that point of time, India’s positioning was more towards lower cost semiconductor manufacturing and lesser expectation on higher (an order of magnitude higher) cost Si based CMOS Fab. 2023-24 Budget allocated 1800 crores for Compound Semi / Display / ATMP / OSAT manufacturing and only 1000 crores for an order of magnitude higher capex intensive Si based CMOS Fab manufacturing along with 200 crores for Design part of the value chain.
Over the last two years, the government has not yet approved any fab (chip manufacturing) proposal since the announcement of the scheme. The big proposal approved is US memory chip Micron’s ATMP plant that will come up in Gujarat ($2.75 billion) in June 2023. Hence, Arun Mamphazy, independent semiconductor analyst believes most of the Rs 6,903 crore allocated is likely to go for Micron ATMP that is already approved.
Other than Micron, Israel’s Tower Semiconductor had resubmits proposal to set up 65 nm, 40 nm chip fab. Other than these two leading names in the chip ecosystem, now India companies including HCL, Tata Group and Hiranandani Group are also venturing into semiconductor ecosystem. HCL has entered into a joint venture with Taiwan’s Foxconn to setup an OSAT in India. On the other hand, Tata Group is working actively towards setting an OSAT and a foundry in the country.
But given the limited allocation, Mamphazy adds, “ it looks like we may still be far away from seeing approval for Silicon fabs despite applicants like Tower and interest shown by Tata, unless more money is allocated in the full budget of 2024 after election."
“Based on 2023 and 2024 budget allocations, it is expected that multiple projects across Semiconductor and Display manufacturing ecosystem will start and require Capex incentives allocation through 2024 as the GOI fiscal support is on a pari passu basis,” adds Faruqui.
The ministry of Electronics and IT and India Semiconductor Mission are currently evaluating the fab and packaging proposals. Sources at the ministry of IT and Electronics have told Business Today that the government is hopeful that India will soon have at least two fabs, and many testing and packaging plants in the next couple of years.
Given India’s focus on emerging into a semiconductor nation, this time around, India’s Union Budget 2024 was closely watched by the key stakeholders across the globe.
Also Read: Interim Budget 2024: Here’s the latest on income tax slabs and rates for new and old tax regimes