The Union Cabinet has approved changes in production-linked incentive (PLI) scheme for manufacturing of semiconductors. Under the revised terms, the PLI scheme will now provide uniform fiscal support of 50 per cent of the capital expenditure of project in pari-passu mode for setting up of compound semiconductors/ silicon photonics/sensors/discrete semiconductors fabs and assembly, testing, marking, and packaging (ATMP)/ outsourced semiconductor assembly and test (OSAT).

The modified incentive programme aims to expedite semiconductor and display manufacturing investments in India. According to government, the modification to the initially announced incentive is based on its assessment that mature technology nodes of 45 nanometre (nm) and above will continue to garner high demand driven by automotive, power and telecom applications. The 45nm and above market segment still constitute around 50 [-per cent of the total semiconductor market.

The government had recently announced an outlay of Rs 760 billion (approximately $10 billion), under its PLI scheme, separately for the development of a semiconductor and display manufacturing electronics ecosystem. Meanwhile, according to a statement, based on the discussions with potential investors, the government expects that work on setting up the first semiconductor facility will commence shortly.