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Govt modifies incentives in semiconductor policy to make it more competitive

Govt modifies incentives in semiconductor policy to make it more competitive

Rajeev Chandrasekhar, Union Minister of State for Electronics and Information Technology, said that the modifications in the semiconductor policy that was announced in December 2021, essentially point to a strategy where the government is harmonizing the incentive schemes across the various categories of semiconductor fabs, ATMP/OSAT and compound fabs.

This modification is likely to accrue large investments by companies to set up chip design and manufacturing facilities in India. (Photo: Reuters) This modification is likely to accrue large investments by companies to set up chip design and manufacturing facilities in India. (Photo: Reuters)

Nine months after it announced a programme for the development of semiconductors and display manufacturing ecosystem in the country, the Union Cabinet has now revised the incentives across the spectrum.

Earlier, there were different slabs for technology nodes. In the existing scheme, 28 nm or lower nodes were eligible for up to 50 per cent incentives of the project cost. From 28 nm to 45 nm were eligible for up to 40 per cent, and from 45nm to 65nm for up to 30 per cent. This has changed now, and all of them will get a flat 50 per cent incentive.

In addition, the financial support proposed for display fabs was up to 50 per cent of project cost (subject to a ceiling of Rs 12,000 crore per display fab), but now the support has been revised to 50 per cent of project cost on a pari-passu (equal footing) basis.

Covering all aspects of the ecosystem, even the incentive for ATMP (assembly, testing, marking, and packaging), which has received the most interest from global and Indian companies, has been increased to 50 per cent. And along with ATMP, for compound semiconductors/silicon photonics/sensors fab and semiconductor OSAT (outsourced semiconductor assembly and test) facilities, the incentive has been increased to 50 per cent.

Additionally, target technologies under the scheme will include discrete semiconductor fabs.

Rajeev Chandrasekhar, Union Minister of State for Electronics and Information Technology, said that the modifications in the semiconductor policy that was announced in December 2021, essentially point to a strategy where the government is harmonizing the incentive schemes across the various categories of semiconductor fabs, ATMP/OSAT and compound fabs.

"By doing this, the semiconductor policy is extremely competitive, and will attract investments across the spectrum of opportunities. We believe that this will further increase the interest and create additional proposals that have been in discussions with us over the last four or five months and move our country closer to India’s semiconductor mission,” he said.

This modification is likely to accrue large investments by companies to set up chip design and manufacturing facilities in India.

Amidst the global semiconductor shortage, countries have realised the importance of semiconductors and are introducing schemes to strengthen and develop semiconductor bases in their respective country.

The government of India announced the semiconductor scheme with an outlay of Rs 76,000 crore in December 2021 and received some credible proposals by mid-February, including a joint-venture between Vedanta-Foxconn for 28nm technology nodes and the display manufacturing unit to produce Generation 8 displays catering to small, medium and large applications. However, the government is still evaluating the proposals and is yet to decide on the approved applications. USA, too, introduced the CHIPS Act in August this year, which has already witnessed big players like Micron committing $15 billion over the next ten years.

Also read: Cabinet approves 50% incentives for semiconductor manufacturing

Also read: Industry welcomes modifications to India's semiconductor policy