The Union Cabinet recently approved tweaks made to the Production Linked Incentive (PLI) scheme for manufacturing of semiconductors.
The government has changed the Rs 76,000-crore incentive scheme for semiconductor and display manufacturing units, as it seeks to entice global players such as Intel to set up production bases in India to help reduce reliance on imports.
The modified PLI scheme for semiconductors would promote manufacturing and accelerate semiconductor investment in India. Based on discussions with potential investors, it is expected that work on establishing the first semiconductor facility will begin soon.
However, as per the changes, under the PLI scheme for setting up semiconductor fabs in India, each technology node will receive 50% project cost support on a pari-passu basis (equal footing).
The PLI scheme will provide financial support of 50% of the project cost on a pari-passu basis for the establishment of display fabs.
Under the scheme, India will also receive fiscal support equal to 50% of capital expenditure for the establishment of silicon photonics, sensor fabs, compound semiconductors, and semiconductor OSAT/ATMP facilities.
Additionally, the PLI scheme’s target technologies will also include discrete semiconductor fabs.
The move comes soon after the Vedanta group announced a Rs 1.54 lakh crore investment in Gujarat for the establishment of semiconductor and display manufacturing units.
The total outlay for the package will remain the same, according to Minister of State for IT Rajeev Chandrasekhar, but harmonising incentives to 50% will make the semiconductor policy “extremely competitive” and attract investment across a spectrum of opportunities, including silicon and compound fabs, packaging units, display fabs, and the design and innovation ecosystem.
According to him, global companies are looking at India as a viable investment destination for semiconductors. India is positioning itself as one of the most appealing destinations in Asia for all things electronics and semiconductors, with the government “confident” that nearly Rs 2 lakh crore will be invested in the next two years.
He also noted that the government believes the move will heighten interest and generate additional proposals that have been discussed over the past four-five months.
Citing the changes in the PLI scheme Sanjay Gupta, Vice-President & India Managing Director at NXP Semiconductors, told News18 that the company applauded this move.
Furthermore, he said: “Given that the government has already announced the PLI and DLI scheme to encourage local manufacturing, this financial support will further provide the much-needed impetus to the semiconductor ecosystem.”
“We have already seen investment in manufacturing picking up pace in the country. This move will further attract global semiconductor players to invest in setting up local manufacturing units and create employment opportunities across hierarchies,” he added.
Meanwhile, Anurag Awasthi, Vice-President (Public Policy, Government and Corporate Relations) at India Electronics and Semiconductor Association (IESA), stated that this landmark policy and the ensuing modification, possess astute clarity in terms of the deliverables, timelines and percentages of capital outlays as compared to many policies in this space worldwide.
“The policy is clear on support infrastructure, demand aggregation, support for R&D in the near future and Skill Development by leveraging EMC 2.0 Scheme. This seminal modification will energise various sectors to include electronics, automotive, defence and aerospace,” he noted.
Additionally, Awasthi told News18 that this move will further accrue large investments by companies to set up chip design and manufacturing facilities in India.
He believes that both the PLI scheme and ‘Make in India’ will make sure that local sourcing of semiconductors and associated components are a reality in the future.
Moreover, Awasthi said: “We at IESA are committed to Atmanirbhar Bharat in thought, word and deed. It is a landmark policy decision in this space today and will go a long way in boosting homegrown talent, design as also manufacturing in semiconductors and ESDM space in India.”
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