India Approves $10 Billion Incentive Plan To Establish Domestic Chip Fabrication

India recently approved an investment of ₹1.53 lakh crore (19 billion) across two semiconductor manufacturing projects and one display fab unit as part of its semiconductor mission. This signals major headway in establishing a vibrant domestic electronics system design and manufacturing (ESDM) ecosystem.</p> <h4>India’s Semiconductors Market</h4> <h5>Current Status</h5> <ul> <li>Indian semiconductor market valued at27.2 billion in 2021, dominated by high value chip imports

Growth Projections

• Semiconductors market projected to reach 100 billion by 2025 on “Digital India” growth</li> <li>High export potential as India uniquely positioned across entire semiconductor value chain from talent to design infrastructure</li> </ul> <h4>SWOT Analysis</h4> <table> <thead> <tr> <td><strong>Strengths</strong></td> <td><strong>Weaknesses</strong></td> </tr> </thead> <tbody> <tr> <td>Rich talent pool for semiconductor design</td> <td>Absence of silicon wafer Fab infrastructure</td> </tr> <tr> <td>Vibrant electronics manufacturing ecosystem</td> <td>Limited R&D in semiconductor material sciences</td> </tr> <tr> <td>Policy support through fiscal and non-fiscal incentives</td> <td>Complex global supply dependencies</td> </tr> </tbody> </table> <p> </p> <table> <thead> <tr> <td><strong>Opportunities</strong></td> <td><strong>Threats</strong></td> </tr> </thead> <tbody> <tr> <td>Leverage production incentives under various schemes to catalyze investments</td> <td>Delays in establishment of semiconductor clusters</td> </tr> <tr> <td>Develop India as alternative manufacturing site to aid global supply chain resilience</td> <td>Competition from East Asian countries wooing chip makers</td> </tr> <tr> <td>Promote ESDM startups under Digital India initiatives</td> <td>Execution challenges to build ambitious semiconductor capacities</td> </tr> </tbody> </table> <h4>Approved Semiconductor Fabs</h4> <h5>Vedanta-Foxconn Chip Unit (Gujarat)</h5> <ul> <li>20 billion investment for display and semiconductor fab facility, 100 acre land acquired
• Capacity to produce display panels and semiconductor chips catering to smartphones and electronics

Tata-IMS Chip Fab (Andhra Pradesh)

• 2.4 billion investment in 45nm analog semiconductor chips manufacturing facility</li> <li>Would support growing electronics and automotive sectors</li> </ul> <h5>IGSS Chip Packaging Unit (Tamil Nadu)</h5> <ul> <li>403 million foreign direct investment by Indian, Japanese and Thai partners
• Advanced chip packing targeted for applications like 5G and electric vehicles

India’s Semiconductor Mission

Policy Framework

• India Semiconductor Mission (ISM) with $10 billion outlay announced in 2021
• Offers fiscal support of up to 50% of project cost for semiconductor fabs to eligible applicants

Incentives Scheme

• Semiconductors and Display Manufacturing Ecosystem schemes introduced
• Support of up to 50% of project cost offered to approved units

Enabling Infrastructure

• Two semiconductor clusters being developed in Karnataka and Uttar Pradesh for hosting integrated facilities
• Common facility centres, ready built factories, utilities support to be provided

Design-Linked Incentive Initiative

• Design Linked Incentive (DLI) scheme introduced in 2022-23 budget
• Aims to strengthen semiconductor design ecosystem by supporting 100 domestic companies

Workforce Skill Development

• Semiconductor human capital development scheme proposed with outlay of ₹760 crore
• Focuses on specialized training in chip design, fabrication, system level integration etc.

Optimizing the Opportunity

Handholding Startups

• Incubators and mentors needed to nurture semiconductor tech startups from idea to market readiness stage

Fabless Design Industry

• Make in India thrust on fabless chip design industry which outsources manufacturing offshore
• Provide tools, IPs access and flexible design infrastructure leveraging rich talent pool

Equipment Manufacturing Ecosystem

• Promote ancillary industries manufacturing semiconductor equipment components like silicon wafers, gases, wafer processing chemicals etc. through PLI schemes

Export Orientation

• Duty relief schemes for exports can grow India into global semiconductor hub
• Packaging and microcontroller exports offer immense potential

University Collaborations

• Joint R&D projects between industry and academia to drive basic sciences progress, technology innovation

From augmenting financial outlays, infrastructure, clusters, attractive schemes to dedicated centres of excellence, India’s recent semiconductor mission adopts a wholesome approach spanning the entire value chain. Executing initiatives professionally while monitoring progress through industry coordination can fructify aspirations of establishing India as a competitive global semiconductor hub.