Government’s mega push for semiconductor manufacture ecosystem

India is dependent on other nations for the semiconductor which is the most important part of the electronics devices. To resolve this, the government plans to set up the semiconductor manufacturing ecosystem for which the incentives worth of Rs 76,000 Cr is approved.

Under a separate design linked incentive (DLI) scheme, firms interested in establishing semiconductor and display fabs in India will be eligible for financial assistance of up to 50% of the project cost from the government. The government will extend product design linked incentives of up to 50% of eligible expenditure and product deployment linked incentives of 6% to 4% on net sales for five years. They will not only focus on components used in electronic devices but also on design, fabrication, packing and testing the semiconductor chips to become completely independent in all areas.

The Support will be provided to the eligible companies to involve in such high capital investment projects in the form of subsidiaries. They will be able to cater the benefit from these schemes as it is expected that the future growth of at least 20 such companies will be able to generate a turnover of more than ₹1,500 crore in the upcoming five years.

The mobility restrictions during the pandemic increased demand for the chips in the technology manufacturing. The global chip makers were unable to meet the increasing demand which had affected many industries. The cost of the chips became very expensive for the producers. The auto sector was affected the most as the chips are the most required component. India has 25,000 talented design engineers which will be put to use for the growth of industry.

Impact

It will be able to generate employment opportunities, increase the export in electronic devices, increase the share in the global value chain, and be globally competitive to attract investment in the areas of core competency.

Thank you.

Regards,

Janvi Shah (Section F),

Kautilya,

IBS Mumbai.