The Covid-19 pandemic has spared none, being one of the deadliest
in the 21st Century. The
pandemic has led to a steep fall in need of the goods and services all across
the globe. Trades amongst many countries has been on a standstill for more than
a year. However, China being one of the major exporter of goods and services
across the globe has suffered a big jolt as a result of the Covid-19 pandemic.
As a result, many countries are shifting their manufacturing bases out of
China, which has been a boon for countries such as India, as it has resulted in
opening new doors for trade of various goods and services.
Semi-Conductor Industry which is considered to be one of the
biggest industry across the world, has been one of the worst hit industries due
to this pandemic. China accounts for manufacturing semi-conductor to the extent
of 24% followed by Taiwan at 21%, South Korea at 19%. There has been a
worldwide shortage in semi-conductors (chips) due to the pandemic. As we
understand the Importance of semi-conductor in various industries electronics,
auto-mobile, tele-communication etc, so most of these industries are struggling
to keep with up the consumer demands amid acute shortage of chips throughout
the world.
Keeping in view the global shortage and in furtherance of the
vision of Aatmanirbhar Bharat and positioning, India as the global hub for
Electronic System Design and Manufacturing, the Indian Government has approved
the comprehensive program for the development of sustainable semiconductor and
display ecosystem in the Country. The program 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.
This shall pave the way for India’s technological leadership in these areas of
strategic importance and economic self-reliance.
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 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 program 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/ consortia that are engaged in Silicon Semiconductor Fabs, Display
Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS)
Fabs, Semiconductor Packaging (ATMP / OSAT), Semiconductor Design.
Following broad incentives have been approved for the
development of semiconductors and display manufacturing ecosystem in India:
Semiconductor Fabs and Display Fabs: The Scheme for Setting up of Semiconductor Fabs and Display
Fabs in India shall extend fiscal support of up to 50% of project cost on
pari-passu basis to applicants who are found eligible and have the technology
as well as capacity to execute such highly capital intensive and resource
incentive 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 at least two greenfield
Semiconductor Fabs and two Display Fabs in the country.
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). MEIT will explore the
possibility for the Joint Venture of SCL with a commercial fab partner to
modernize the brownfield fab facility.
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. At least 15 such units of Compound Semiconductors and
Semiconductor Packaging are expected to be established with Government support
under this scheme.
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. Support
will be provided to 100 domestic companies of semiconductor design for
Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP
Cores and semiconductor linked design and facilitating the growth of not less
than 20 such companies which can achieve turnover of more than Rs.1500 crore in
the coming five years.
India Semiconductor Mission: In order to drive the long-term strategies for developing a
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 semiconductor and display industry. It
will act as the nodal agency for efficient and smooth implementation of the
schemes on Semiconductors and Display ecosystem.
India is already on footsteps to become a global manufacturing
hub for semi-conductors industry with Vedanta leading the way, having already
proposed a 3.5 billion dollars investment for setting up of a semi-conductor
industry. The Indian Government expects heavy investments to start coming from next
financial year in the country. India is geographically very well located on the
world map which will give many companies access to its diverse resources and
which will further help India become a global manufacturing hub. The pandemic
has led to many companies as well as industries moing out from China as it is
no longer considered ideal for business, with this India has an opportunity to
become a global manufacturing hub for Semi-conductors.
Comprehensive Fiscal Support for Semiconductors and Electronics
With the approval of the programme for development of
semiconductors and display manufacturing ecosystem in India with an outlay of
Rs.76,000 crore (>10 billion USD), Government of India has announced
incentives for every part of supply chain including electronic components,
sub-assemblies, and finished goods. Incentive support to the tune of Rs.55,392
crore (7.5 billion USD) have 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 (USD 13 billion) are approved for allied sectors
comprising of ACC battery, auto components, telecom & networking products,
solar PV modules and white goods. In total, Government of India has
committed support of Rs. 2,30,000 crore (USD 30 billion) to position India as
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 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.
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