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GoI Declares New Incentive Package for Semiconductor Manufacturing

The move come at a time when shortages in the supply of the critical component have hit industrial production across automobiles, electronics and other technology-led sectors.

Government of India (GoI) has recently approved a new incentive-based proposal to boost and usher semiconductor and display fab manufacturing into the country through a Rs 76,000-crore incentive package.

GoI Incentive Semiconductor ManufacturingCommunications and IT minister Ashwini Vaishnaw announced the decision after the Cabinet meeting, chaired by Prime Minister Narendra Modi, cleared the proposal, which seeks to put India in the global league of top electronics manufacturing nations such as China, Taiwan, South Korea and Malaysia.

Vaishnaw said that incentives have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging and semiconductor design.

“Today’s historic decision will boost the development of the complete semiconductor ecosystem, ranging from design, fabrication, packaging, and testing,” Vaishnaw said.

Vaishnaw said that while electronics manufacturing in the country currently stands at around $75 billion, it is expected to grow to as much as $250 billion over the next five years. “Imagine, how much we will benefit if this surge is met by local manufacturing of chips. The industry tells me that with local sourcing, we can even touch $300 billion in electronics manufacturing.”

The move come at a time when shortages in the supply of the critical component have hit industrial production across automobiles, electronics and other technology-led sectors.

With no local manufacturing, India meets its semiconductors needs through imports, which is estimated to reach around $100 billion by 2025 from about $24 billion now.

Foreign exchange outflows have been assuming alarming proportions with rapid growth in the adoption of digital products such as smartphones, laptops, electronic gadgets and IoT devices as well as new-age cars and vehicles.

The biggest pinch from the absence of local manufacturing was felt at the time of the Covid-19 lockdown when a global surge in the demand for electronics saw a worldwide shortage of chips, hitting countries like India the most.

This prompted the government to quickly stitch up a comprehensive incentive package, which worked towards building up an ecosystem, and the entire process was overseen by the Prime Minister’s Office.

GoI is in talks with top global companies such as Taiwan Semiconductor Manufacturing Co, Intel, AMD, United Microelectronics Corp, and Fujitsu, among others. In India, Tata Group and Anil Agarwal’s Vedanta have also spoken about their interest in semiconductors.

The government expects that around 1.35 lakh jobs will be generated through the measure over the next four years.

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Aishwarya Saxena

A book geek, with creative mind, an electronics degree, and zealous for writing.Creativity is the one thing in her opinion which drove her to enter into editing field. Allured towards south Indian cuisine and culture, love to discover new cultures and their customs. Relishes in discovering new music genres.

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