Development Of Semiconductor Ecosystem In India

The Union Cabinet has approved the comprehensive program for the development of sustainable semiconductor ecosystem in the country in furtherance of the vision of Aatmanirbhar Bharat and positioning India as the global hub for electronics manufacturing with semiconductors as the foundational building block.

• For this Government of India has committed support of Rs. 2,30,000 crore (USD 30 billion).

Objective

The programme aims to:

• provide attractive incentive support to companies / consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT), Semiconductor Design.
• serve as a focal point for the comprehensive, coherent, efficient, and smooth deployment of the Program for Development of Semiconductor in consultation with the Government ministries/departments/agencies, industry, and academia.

Need

Semiconductors are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0.

• Semiconductors manufacturing is very complex and technology-intensive sector involving huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology, which require significant and sustained investments.
• In the current geopolitical scenario, trusted sources of semiconductors hold strategic importance and are keys to the security of critical information infrastructure.
• There is also chip shortage which is measured in chip lead time, which is the gap between when a chip is ordered and when it is delivered. According to a Bloomberg report, which quoted research by Susquehanna Financial Group, the chip lead time increased to 17 weeks in April, from around 12 weeks in the beginning of 2020.

Components

Following broad incentives have been approved for the development of semiconductors manufacturing ecosystem in India:

• Semiconductor Fabs: A fiscal support of up to 50 per cent of the project cost has been approved for setting up certain variants of silicon-based semiconductor fab in India for 6 years from date of approval.
• A fab is short for fabrication plant where raw silicon wafers are processed and turned into integrated circuits.
• Semi-conductor Laboratory (SCL): Union Cabinet has also approved that Ministry of Electronics and Information Technology will take requisite steps for modernization and commercialization of Semi-conductor Laboratory (SCL).
• SCL Mohali has also been handed over to MeitY from Department of Space and it is being opened up as a commercial fab for wider participation by Indian semiconductor design companies. This is expected to strengthen India’s quest for AtmaNirbhar Bharat in semiconductors.
• Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT Units: The Scheme for Setting up of Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT facilities in India shall extend fiscal support of 30% of capital expenditure to approved units.
• Semiconductor Design Companies: The Design Linked Incentive (DLI) Scheme shall extend product design linked incentive of up to 50% of eligible expenditure and product deployment linked incentive of 6% - 4% on net sales for five years.
• India Semiconductor Mission: The India Semiconductor Mission (ISM) is a specialised and independent business division within the Digital India Corporation that aims to build a vibrant semiconductor and display ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design.
• This mission has been given the autonomy to decide the appropriate technology mix, applications, node generation, and capacity, among others and propose the structure and quantum of fiscal support for the selected applicants.

Significance

The program will give an impetus to semiconductor manufacturing by facilitating capital support and technological collaborations.

• The program will propel innovation and build domestic capacities to ensure the digital sovereignty of India.
• It will also create highly skilled employment opportunities to harness the demographic dividend of the country.
• The program will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors manufacturing as well as design. This shall make India a technological leader in these areas of strategic importance and economic self-reliance.
• Development of semiconductor ecosystem will have a multiplier effect across different sectors of the economy with deeper integration to the global value chain.
• The program will promote higher domestic value addition in electronics manufacturing and will contribute significantly to achieving a USD 1 Trillion digital economy and a USD 5 Trillion GDP by 2025.