Govt unveils scheme for setting up semiconductor fab units in India. Details here

In an attempt to attract large investments for setting up semiconductor wafer fabrication facilities within the country to strengthen the electronics manufacturing ecosystem, the Ministry of Electronics and Information Technology unveiled the scheme for setting up Semiconductor Fabs in India. 

This is in line with the National Policy on Electronics 2019 (NPE 2019) to make India a global hub for Electronics System Design and Manufacturing (ESDM) and enable the industry to compete globally. The financial support offered includes up to 50% of the project cost.

The tenure of the scheme offered includes, “support shall be provided for a period of six years. The tenure of the actual fiscal support outflow may be extended based on the approval of the Minister of Electronics and Information Technology,” as per the official release. 

The application window starts from January 1, 2022 and is open until the next 45 days. Further, for additional support, the government will offer infrastructure support through “Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme for development of infrastructure / Common Facility Centre subject to the proposal satisfying the EMC 2.0 framework requirements.”

The semiconductor fabs set up in India will be supported through purchase preference in procurement of electronic products by the Government under the Public Procurement (Preference to Make in India) Order 2017, it notified.

Additionally, up to 2.5% of the outlay of the scheme shall be earmarked for meeting the research and development (R&D), skill development and training requirements for the development of semiconductor ecosystem in India.

Currently valued at around USD 2 trillion ( ₹150 lakh crore), the global electronics market is expected to grow significantly given the increasing penetration of emerging technologies including 5G, IoT, Artificial Intelligence, Robotics, Smart Mobility, Smart Manufacturing, etc.

While the global semiconductor market was valued at ₹33 lakh crore in 2020 and expected to reach ₹75 lakh crore by 2030, the Indian semiconductor market stood at ₹1.13 lakh crore in 2020 and is estimated to reach ₹4.73 lakh crore by 2026. It is estimated that by 2030, India’s semiconductor market will be driven by wireless communications, consumer electronics and automotive electronics with 24%, 23% and 20% of the market share, respectively.

As per the release by Ministry of Electronics and Information Technology, the domestic value addition is estimated to be in the range of 10% - 30% only, and growth in manufacturing so far has primarily been on account of final assembly using imported components, sub-assemblies / parts, etc. This is due to the lack of a robust semiconductor manufacturing ecosystem in the country.

“Semiconductor supply chains are marked by geographical specialisation with 75% of global manufacturing capacity in East Asia. Geographic specialisation creates vulnerabilities emerging due to natural disasters, infrastructure shutdowns or geopolitical events. Therefore, it is critical to develop secure and resilient semiconductor supply chains for industrial growth, digital sovereignty, and technological leadership,” the release said.