Despite incentives, India faces roadblocks in localising semiconductors
Micron plant ground breaking ceremony in Sanand, Gujarat
By Sanjay Singh
New Delhi, October 19: Even as Union Telecom and IT Minister Aswhini Vaishnaw is hopeful that India would get its first electronic chip manufacturing plant within a year from now, challenges remain intact for India even as the government announced its semiconductor scheme worth Rs 76,000 crore for attracting semiconductor and display fabs in the country on December 15, 2021.
India has seen multiple failures to get a semiconductor fab into India in the past two decades. However, in June 2023, India announced its decision to reopen the application process for existing and new applicants interested in setting up semiconductor fabrication plants (commonly called fabs). The process will be undertaken by the new government agency India Semiconductor Mission (ISM) under the Ministry of Electronics and Information Technology (MeitY). The ISM is designated to implement the “long-term strategies” for developing semiconductors and display manufacturing “ecosystem.”
Despite the initial disappointment in the race to be a semiconductor manufacturing hub, this time around, with an extended window till December 2024, India would be expecting collaborations with major global partners, particularly Taiwan and the island’s “national jewels,” namely the high-tech companies. US chipmaker Micron’s plans to invest US$2.7 billion to set up a semiconductor testing and packaging unit in Gujarat and been approved by the Indian government.
The government received three semiconductors fab and two display fab proposals in the first round that closed in February 2022. And following the industry concerns, the government modified the scheme in September this year to offer a flat 50 per cent incentive to approved fabs across the board. States were supposed to lure the applicants with another set of stimuli.
However, industry veterans who have worked closely in the semiconductor space, have different opinions. The US is giving 30 per cent incentive. India is giving 50 per cent from the central government, and state governments are putting in another 20 per cent.
The semiconductor manufacturing ecosystem in the country and a wafer fabrication plant will be set up by the government with an initially earmarked $10 billion incentive. The wafer fabrication plants are the first building block of physical chips used in the manufacturing of all high-tech electronic products.
About The Author
