With the Union Cabinet approving the Rs 76,000 crore incentive scheme for semiconductor manufacturing, industry leaders have welcomed the government's decision, calling it a visionary announcement made for the semiconductor industry ever, and will mark India's strong presence on the global semiconductor ecosystem.
"The semiconductor manufacturing policy and the related incentives announced today by the Government of India is the most significant and visionary announcement made for the semiconductor industry ever. It addresses almost all facets of the industry - be it design. Wafer manufacturing, ATMP or Compound Semi fab. We feel that it comes at an opportune time, with credits to MeitY for incorporating industry inputs from IESA. The cascading effect this policy announcement will make will be huge and I am sure India will grow to a Semiconductor leader of the world, not only in design but also in manufacturing in the coming years," said K Krishna Moorthy, CEO & President, India Energy Storage Alliance (IESA).
The scheme for setting up of semiconductor fabs and display fabs in India shall extend fiscal support of up to 50 per cent of project cost on the pari-passu basis to applicants who are found eligible and have the technology as well as capacity to execute such highly capital intensive and resource incentive projects.
The government of India will work closely with the state governments 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. In addition, the Scheme for Setting up of Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT facilities in India shall extend fiscal support of 30 per cent of capital expenditure to approved units.
At least 15 such units of Compound Semiconductors and Semiconductor Packaging are expected to be established with government support under this scheme. The Union Cabinet has also approved that the Ministry of Electronics and Information Technology (MEITY) will take requisite steps for the modernization and commercialisation of Semi-conductor.
"Setting up a fab requires a significant upfront investment to the tune of $10B-$20B and takes around 3 to 5 years to start generating revenues. These incentives help companies stay on course during the initial period and equip them to compete with established fabs in other countries once the production starts. These incentives also help establish the ancillary ecosystem required for full-chip design and fabrication," said Sumit Sethi, Chief Operations Officer at eInfochips.
Srinivas Satya, Country President, Applied Materials India argued this Rs 76,000 crore investment for a production linked incentive (PLI) scheme towards semiconductor and display board production is a positive move towards uplifting the industry and economy. "India needed such an audacious goal and an integrated approach to kickstart its semiconductor industry. The current semiconductor shortage has made economies realise the strategic role of these chips in development. India, early on in the game, acknowledged the need to create a semiconductor ecosystem of its own. This policy announcement is significant that it conceives an India Semiconductor Mission and integrates design-to-semiconductor device - in its overall ESDM enablement program," he added.
In addition to setting up fabs, the government is also promoting the current strength of the country - chip designing. Hence, the government has also announced Design Linked Incentive as well and will offer up to 50 per cent of eligible expenditure and product deployment linked incentive of 6 - 4 per cent on net sales for five years.
Support will be provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked to design and facilitating the growth of not less than 20 such companies which can achieve turnover of more than Rs 15,00 crore in the coming five years.
"Today's government announcement to support semiconductors could be a turning point for the electronics industry in India! It will help India become a major world player in electronics over the next two decades, just as it has become a global software power. "Good to see that both high value aspects of design as well as manufacturing have been addressed as together, they will reinforce a multiplier effect. We are particularly happy to see that for the first time there's an incentive for semiconductor "design" industry through the PLI scheme. There are around 15-20 fabless design startups in India today and with such support they will bring in high value intellectual property into India's semiconductor value chain. The huge talent pool that India already has in semiconductor design will enable many more Indian startups to come up. I won't be surprised to see electronics and semiconductor unicorns in the next few years," pointed out Hemant Mallapur, Co-Founder & Exec VP of Engineering, Saankhya Labs.
The government has also announced a C2S - chips to startup - program that will train 85,000 engineers to work in the semiconductor ecosystem.
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