Cabinet approves 50% incentive to manufacture semiconductors

On Wednesday, the Cabinet approved amendments to the scheme for the semiconductor and display manufacturing ecosystem, with a consolidated financial subsidy of 50 percent of the project cost for all technology nodes and the creation of display fabrats.

A government statement said financial support of 50 percent equity capital expenditure under a scheme to set up compound semiconductors, silicon photonics, sensors and ATMP semiconductor facilities in India.

According to Anurag Thakur, I&B Minister, the amendments will strengthen the semiconductor scheme and raise capacities within the country, encouraging investments and job creation.

The minister said that due to supply chain disruption, many countries have announced financial incentives for companies to manufacture semiconductors. Therefore, the government has modified the existing scheme to attract businesses.

India’s consumption remains high and almost all requirements are imported. Earlier, PLI benefits ranged from 30-50 percent of the project cost depending on the categories. Now it is standardized financial support of 50 percent across the categories of the plan,” Thakur said.

The program has attracted several global semiconductor players to set up a fab in India. The revised program will accelerate investments in the semiconductor industry and offer manufacturing in the country.

The statement added that on the basis of discussion with potential investors, work on the first semiconductor facility is expected to start soon.

According to Anurag Awasthi, Vice President (Public Policy, Government and Corporate Relations), Electronics and Semiconductor Association of India, the post adjustment has astonishing clarity in terms of achievements, timelines and percentage of capital expenditure, when compared to many other policies worldwide.

“The policy is clear on supporting R&D and skills development. The amendment will revitalize various sectors to include electronics, automotive, defense and aerospace. This will lead to more significant investments by companies to set up chip design and manufacturing facilities in India.

“It is a historic political decision and will go a long way in promoting local talent, design and also manufacturing in the semiconductor and EDSM space in India,” added Awasthi.