The government has notified the semiconductor policy which was cleared by the Union Cabinet earlier this month. According to the gazette notification, the government will provide up to 50 per cent of project cost for two semiconductor and two display fabs in the country. Additional support of infrastructure will be provided through EMC2.0 scheme, demand aggregation, support for research and development, skill development and training along with support offered by the state government if any.
The application window starts from January 1, 2022 and will be open for 45 days. Support under the scheme shall be provided on pari-passu basis for a period of six years.
This move by the government is expected to attract large investments for setting up semiconductor wafer fabrication facilities in the country to strengthen the electronics manufacturing ecosystem and help establish a trusted value chain.
In addition, the government also announced Rs 760 billion ($10 billion) package to incentivise companies to set up chip manufacturing and design facilities in India. The funding will be provided over a period of six years and close to 20 units across different areas are expected to be set up over the next two years.
For compound fabs and ATMP facilities, 30 per cent of the capital expenditure will be reimbursed and tenure of the scheme will be three years starting from January 1, 2022. The government is expecting 15-20 companies to be supported in each category that is compound semiconductor and ATMP.
Also, the design linked incentive (DLI) scheme will extend product design linked incentive of up to 50 per cent of eligible expenditure and product deployment linked incentive of 4-6 per cent on net sales for five years. This aims at facilitating the growth of 20 such companies which can achieve turnover of more than Rs 15 billion in the next five years.
