The union cabinet has approved Production Linked Incentive (PLI) scheme for semiconductor and display board production in the country.
The scheme envisages investment of Rs 760 billion in semiconductor production over the next 5-6 years.
The programme aims to provide attractive incentive support to companies that are engaged in silicon semiconductor fabs, display fabs, compound semiconductors/ silicon photonics / sensors (including MEMS) fabs, semiconductor packaging (ATMP / OSAT), semiconductor design.
Through this scheme the government aim at ushering a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design.
Under the scheme for setting up of semiconductor fabs and display fabs in India, the government will extend fiscal support of up to 50 per cent of project cost on pari-passu basis to applicants who are found eligible and have the technology as well as capacity to execute such projects. Government of India will work closely with the state governments 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 atleast two greenfield semiconductor fabs and two display fabs in the country.
The union cabinet has also approved that ministry of electronics and information technology (MeitY) will take requisite steps for modernisation and commercialisation of semi-conductor laboratory (SCL).
Under the scheme for setting up of compound semiconductors / silicon photonics / sensors (including MEMS) fabs and semiconductor ATMP / OSAT facilities in India, the government will extend fiscal support of 30 per cent of capital expenditure to approved units. 15 such units of compound semiconductors and semiconductor packaging are expected to be established with government support under this scheme.
In addition, 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.
In order to drive the long-term strategies for developing a sustainable semiconductors and display ecosystem, a specialised and independent “India semiconductor mission (ISM)” will be set up. ISM will be led by global experts in semiconductor and display industry. It will act as the nodal agency for efficient and smooth implementation of the schemes on semiconductors and display ecosystem.
Commenting on the approval of PLI scheme for semiconductors, P.N. Sudarshan, partner and TMT industry leader, Deloitte India, said, “While this initiative may ameliorate the situation in the medium term, this is even better in the long term as this would spur the semiconductor manufacturing segment. That would provide opportunities both for import substitution and export propulsion. Additionally, this initiative could also herald an end to end presence from fab to box for India in the electronics value chain. In the long run, we could also have large domestic corporations actively participate in this segment. To conclude, if the government could ease macro factors such as ease of doing business, enhancing the seamless import-export ecosystem for this segment, etc., this is a very real opportunity.”
