Govt clears `76K cr PLI for chip making
The Union Cabinet on Wednesday cleared a Rs 76,000-crore incentive scheme for encouraging semiconductors and display manufacturing in India. More than 20 semiconductor design, components manufacturing and display fabrication units would be set up in the country over the next six years under the scheme.
The latest package for semiconductors follows similar incentives announced in the recent months and years for other part of the supply chain, including electronic components, sub-assemblies, and finished goods. In all, the government has committed support of Rs 2,30,000 crore to position India as global hub for electronics manufacturing with semiconductors as the foundational building block.
Prime Minister Narendra Modi said the scheme will encourage research and innovation in the sector and also boost manufacturing, strengthening the 'Aatmanirbhar Bharat' programme.
"Today's Cabinet decision on semi-conductors will encourage research and innovation in the sector. It will also boost manufacturing and thus strengthen the dream of an Aatmanirbhar Bharat," Modi tweeted.
Semiconductor chips are used in making a wide array of products, ranging from cars to phones and TVs. The government's move comes at a time when chips supply has been severely disrupted globally, causing a crisis in several industries, including automobiles and gadgets.
A government source said with this scheme, the government is hoping to attract top semiconductor manufacturers such as Media-tek, Intel, Qualcom, Samsung and Texas Instruments.
Briefing the media on the Cabinet decisions, information and broadcasting minister Anurag Thakur said the Cabinet approved the production-linked incentive (PLI) scheme for semiconductors worth Rs
76,000 crore, spread over six years. IT minister Ashwini Vaishnaw said the scheme will help in the design, fabrication, packing and testing of the microchips and developing a complete ecosystem.
"The incentives include
25 per cent subsidy on capital expenditure for establishing unit of Compound Semiconductor Wafer Fabrication (Fab), assembly, testing, and packaging facility. If we look at the journey of electronics manufacturing in the last seven years, our beginning was very small, but today we have reached $75 billion in electronics manufacturing. The pace at which we are running, this same electronic manufacturing will reach $300 billion (over Rs 20 lakh crore) in the next six years," Vaishnaw said.
Tthe I&B minister said the Cabinet also approved reimbursement of Rs 1,300 crore on digital transactions using UPI and Rupay debit card. "A scheme has been approved to provide incentives to encourage digital transactions through RuPay debit card and BHIM UPI of small amounts. It will incur an expense of around Rs 1,300 crore," he said.
Chip companies are now hopeful that the incentives will help them establish an ancillary ecosystem. "Sett-ing up a fab requires a significant upfront investment to the tune of $10 bn-$20 bn and takes around three to five years to start generating revenues," said Sumit Sethi, COO at consultants eInfochips.