Cabinet approves Programme for Development of Semiconductors and Display Manufacturing Ecosystem

Union Minister for Railways, Communications, Electronics and Information Technology Ashwini Vaishnaw addressing a press conference on Cabinet Decisions, in New Delhi on December 15, 2021.

Cabinet approves Programme for Development of Semiconductors and Display Manufacturing Ecosystem

New Delhi, December 16, 2021

The Union Cabinet on Wednesday approved a comprehensive programme for the development of a sustainable semiconductor and display manufacturing ecosystem in the country.

The programme will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design, an official press release said.

This will pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance, it said.

Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0. Semiconductors and display manufacturing is a 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. The programme will give an impetus to semiconductor and display manufacturing by facilitating capital support and technological collaborations.

The programme aims to provide attractive incentive support to companies and consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors, Silicon Photonics, Sensors (including MEMS), Fabs, Semiconductor Packaging (ATMP / OSAT), and Semiconductor Design.

The scheme for setting up of Semiconductor Fabs and Display Fabs in India will extend financial support of up to 50% of project cost on a pari-passu basis to applicants who have the technology as well as capacity to execute such highly capital intensive and resource incentive projects.

The Union Government will work closely with the State Governments to establish High-Tech Clusters with the requisite infrastructure in terms of land, semiconductor grade water, high-quality power, logistics and research ecosystem to approve applications for setting up at least two greenfield Semiconductor Fabs and two Display Fabs in the country.

The Ministry of Electronics and Information Technology (MeitY) will take the requisite steps for the modernization and commercialization of the Semi-conductor Laboratory (SCL). MeitY will explore the possibility for a joint venture of SCL with a commercial fab partner to modernize the brownfield fab facility, the release said.

The Scheme for Setting up of Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT facilities in India will extend financial support of 30% of capital expenditure to approved units. At least 15 such units of Compound Semiconductors and Semiconductor Packaging are expected to be established with Government support under this scheme.

The Design Linked Incentive (DLI) Scheme will 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. Support will be provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductors linked to design and facilitating the growth of not less than 20 such companies which can achieve turnover of more than Rs 1,500 crore in the coming five years.

To drive the long-term strategies for developing sustainable semiconductors and display ecosystem, a specialized and independent “India Semiconductor Mission (ISM)” will be set up. The India Semiconductor Mission will be led by global experts in the semiconductor and display industry. It will act as the nodal agency for efficient and smooth implementation of the schemes on Semiconductors and Display ecosystem.

With the approval of the programme for the development of the semiconductors and display manufacturing ecosystem in India with an outlay of Rs.76,000 crore (more than $ 10 billion), the Government has announced incentives for every part of the supply chain including electronic components, sub-assemblies, and finished goods. Incentive support to the tune of Rs 55,392 crore ($ 7.5 billion) has been approved under PLI for Larges Scale Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.

In addition, PLI incentives to the quantum of Rs 98,000 crore ($ 13 billion) are approved for allied sectors comprising ACC battery, auto components, telecom & networking products, solar PV modules and white goods. In total, the Government has committed support of Rs 2,30,000 crore ($ 30 billion) to position India as a global hub for electronics manufacturing with semiconductors as the foundational building block.

"In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure. The approved 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.

"Development of semiconductor and display ecosystem will have a multiplier effect across different sectors of the economy with deeper integration to the global value chain. The programme will promote higher domestic value addition in electronics manufacturing and will contribute significantly to achieving a $ 1 trillion digital economy and a $ 5 trillion GDP by 2025," the release added.


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