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Indian government promoting semiconductor manufacturing, will share project cost

Written by Akhil Dalvi

Recently, the Government of India announced an INR 76,000 crore incentive scheme for semiconductors along with detailed guidelines. According to this scheme, the Government will provide 50% of the project cost for manufactures who wish to establish facilities. The facilities will fabricate the semiconductor chips for which the government will cover 50% of costs for 28nm chips.

Additionally, it will cover 40% of costs for manufacturing chips above 28nm and up to 45nm. Finally, it will also cover 30% of the overall costs for manufacturing chips above 45nm and up to 65nm. Considering that nm represents one billionth of a meter, researchers are working towards building smaller and better semiconductor chips.

Semiconductor Incentive Scheme: Document Details

Via its nodal agency, India Semiconductor Mission, the Government will provide support to semiconductor chip manufacturers for 6 years. The government may extend the actual fiscal support outflow after being approved by the electronics and IT minister. Meanwhile, the document also states that the government’s share will not exceed 49% of the total project equity. To ensure fiscal support as an equity, applicants will have to invest a minimum of INR 20,000 crore.

Applicants must also ensure that they have a minimum revenue of INR 7,500 crore in electronics system design. The applicants must conduct manufacturing in any of the 3 financial years which precede the year of submission. According to the document, domestic electronics manufacturing has increased greatly in the last few years with changes in manufacturing stages. The domestic electronics manufacturing has moved from semi-knocked down (SKD) to a completely knocked down (CKD) stage of manufacturing.

Plans for the future

The Government of India has also stated that it will provide additional infrastructure support via its EMC2.0 scheme. This scheme will involve demand aggregation, support for R&D, Skill Development, and Training along with State Government support. The new semiconductor support scheme will also attract various large investment opportunities for setting up wafer fabrication facilities. This will allow the country to strengthen its electronics manufacturing ecosystem and eventually establish a trusted value chain.

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