The Government of India aims to build our country as a manufacturing hub. In March 2020, the government first released the Production Linked Incentive (PLI) Scheme, which had a focus on Medical and Pharmaceutical equipment. In November, the government further added 10 new schemes, which affected the automobile industry both directly and indirectly. Now, the Union Ministry has approved a ₹76,000 Crore scheme for chip-making.
Future plans
Information and Broadcasting Minister, Anurag Thakur said that the PLI Scheme is extended to invest ₹76,000 Cr. in the semiconductor and display board production in the coming 5-6 years. With this scheme, the government aims at developing a complete ecosystem that will help in the design, fabrication, packing, and testing of microchips in our country. As we all know, India and practically the entire world is suffering from an acute semiconductor shortage.
The automobile industry is one of the worst-hit due to this deficiency. Thus, this sizable addition of semiconductors and design fabs under the PLI Scheme has been implemented at the best possible time. Additionally, it will help the automobile industry by bringing down waiting periods as the manufacturers could push their production lines to full capacity. Not just that, this will result in reduced costs for automobiles, as the high dependency on imports will be shifted to internal manufacturers.
Also read: Tata Motors To Manufacture Semiconductor Chips
What are the incentives?
Many big names like Israel’s Tower Semiconductor, Foxconn, Tata Group have shown interest in this scheme. Let’s take a closer look at all the incentives under this scheme;
- Semiconductor Fabs and Display Fabs: Under the scheme of setting up Semiconductor Fabs and Display Fabs, our country will extend financial support of up to 50 percent of project cost with equal footing. The applicants should be eligible in terms of having the technology and capacity to execute projects with such high capital resources.
- Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT Units: Under the scheme for setting up of compound semiconductors/ Silicon Photonics/ Sensors Fabs and Semiconductor ATMP/OSAT facilities India will extend financial support of up to 30 percent. Furthermore, the government aims at establishing 15 such units of compound semiconductors and semiconductor packing under the scheme.
- Semiconductor Design Companies: Under the Design Linked Incentive (DLI) Scheme, India shall extend up to 50 percent of eligible expenditure and product deployment linked incentive of 6-4 percent on net sales for five years.
This scheme shall take some time to affect our market. Experts suggest that we shall see some significant changes in our electronics industry in the next 6 to 9 months. But overall, this scheme is headed for long-term gains for our country. Keeping that in mind an “Indian Semiconductor Mission” or “ISM” will be set up and it will act as the nodal agency for smooth implementation of the schemes involving semiconductors and display ecosystems.
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