Govt. approves incentive scheme for semiconductors

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Govt. approves incentive scheme for semiconductors

Industry leaders welcomed the decision, and called it a visionary announcement for the semiconductor industry and will mark India's strong presence in the global semiconductors ecosystem, with the Union Cabinet approving the Rs 76,000 crore incentive scheme for semiconductor manufacturing.

It addresses almost all aspects of the industry - be it design or product development. Wafer manufacturing, ATMP or Compound Semi fab. It comes at an opportune time, with credits to MeitY for incorporating industry inputs from IESA. The policy announcement will have a huge impact and I am sure that India will grow to a Semiconductor leader in the world, not only in design but also in manufacturing in the coming years, said K Krishna Moorthy, CEO, India Energy Storage Alliance IESA The scheme for setting up of semiconductor fabs and display fabs in India will extend fiscal support of up to 50 per cent of the project cost on the pari-passu basis to applicants who have the technology and capacity to execute such highly capital intensive and

The government of India will work closely with the state governments to establish High-Tech Clusters with the necessary 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. The Scheme for setting up of Compound Semiconductors Silicon Photonics Sensors including MEMS Fabs and Semiconductor ATMP OSAT facilities in India will extend fiscal support of 30 per cent of capital expenditure to approved units.

There are about 15 such units of Semiconductors and Semiconductor Packaging that are expected to be established with government support under this scheme. The Ministry of Electronics and Information Technology MEITY will take necessary steps for the modernization and commercialisation of Semi-conductor, according to the Union Cabinet.

It takes around 3 to 5 years for a fab to generate revenues and requires significant upfront investment to the tune of $10 B -- $20 B. These incentives help companies stay on course during the initial period and equip them to compete with established fabs in other countries when production starts. The incentives also help establish the ancillary ecosystem required for full-chip design and fabrication, said Sumit Sethi, Chief Operations Officer at eInfochips.

Srinivas Satya, Country President, Applied Materials India argued that the investment of 76,000 crore for a production linked incentive PLI scheme towards semiconductor and display board production is a positive move towards uplifting the industry and economy. India needed an ambitious and integrated approach to kickstart its semiconductor industry. The strategic role of chips in development has been realized by the fact that there is a current shortage of semiconductors. India has a semiconductors ecosystem of its own, and acknowledged it early on in the game. He said that this policy announcement is significant that it conceives an India Semiconductor Mission and integrates design-to- semiconductor device in its overall ESDM enablement program.

In addition to setting up fabs, the government is promoting the strength of the country chip design. The government has also announced Design Linked Incentive, which will offer up to 50 per cent of eligible expenditure and product deployment linked incentive of per cent 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 related to design and facilitating the growth of 20 such companies which can achieve a turnover of more than 15,00 crore in the next five years.

Today's government announcement to support semiconductors could be a turning point for the electronics industry in India! It will help India become a major world player in electronics over the next two decades, just as it has become a global software power. It is good to see that both high-value aspects of design and manufacturing have been addressed, as they will reinforce a multiplier effect. For the first time, there is an incentive for the semiconductor design industry through the PLI scheme. There are about 15 -- 20 fabless design startups in India today and with such support they will bring in high value intellectual property into India's semiconductor value chain. India already has a huge talent pool in semiconductor design, which will enable many more Indian startups to start up. Hemant Mallapur, Co-Founder Exec VP of Engineering, Saankhya Labs, said he won't be surprised to see electronics and semiconductor unicorns in the next few years.

The government has also announced a C 2 S chips for the startup program that will train 85,000 engineers to work in the semiconductors ecosystem.