Support plan for chip companies: Import curbs, local sourcing for electronics

“Apart from offering financial incentives to companies to set up semiconductor fabs in the country, we could potentially encourage that products made in India will have to use semiconductors made here,” the official said.

semiconductors, semiconductor manufacturing capacity, manufacturers of electronic products, IT Ministry, Ministry of Electronics and Information Technology, Indian Semiconductor Mission (ISM), Business news, Indian express business news, Indian express, Indian express news, Current Affairs

Last December, the Union Cabinet approved a Rs 76,000-crore plan to provide incentive support for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging and semiconductor design. Reuters file

In addition to the financial incentives being provided to set up semiconductor manufacturing capacity in the country, the government could encourage manufacturers of electronic products to use made-in-India semiconductors, while potentially restricting imports to a certain extent, a senior IT Ministry official said.

“Apart from offering financial incentives to companies to set up semiconductor fabs in the country, we could potentially encourage that products made in India will have to use semiconductors made here,” the official said.

Indicating the possibility of import restrictions on semiconductors once capacity here is up and running, the official said: “Why would we allow that to be imported from somewhere else if there’s a … compatible product … that is being made in India. Why would we allow something to be imported from Taiwan?”

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The first stage of evaluation of these applications will be carried out by the India Semiconductor Mission, according to the official quoted above. “The government is in the final stages of selecting a CEO of the Indian Semiconductor Mission (ISM) and could make a decision as early as mid May. Once that is done, the ISM will start the evaluation of proposals for the PLI scheme,” the person added.

“Once the proposals are cleared by the ISM, they will head to the Cabinet for final approval. We estimate that after a deal is signed it will take around three years for the selected entities to start semiconductor production.”

So far, the government has received five applications for setting up of semiconductor fabrication and display fabrication units with a total investment commitment of $20.5 billion (Rs 1.53 lakh crore). For setting up of semiconductor fab units, proposals have been received from Vedanta (which has announced a joint-venture with Foxconn), Singapore-based IGSS Ventures, and ISMC, which is led by Next Orbit Ventures Fund.

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(The correspondent is in Bengaluru at the invite of the Ministry of Electronics and Information Technology)

Soumyarendra Barik

Soumyarendra Barik is Special Correspondent with The Indian Express and reports on the intersection of technology, policy and society. With over five years of newsroom experience, he has reported on issues of gig workers’ rights, privacy, India’s prevalent digital divide and a range of other policy interventions that impact big tech companies. He once also tailed a food delivery worker for over 12 hours to quantify the amount of money they make, and the pain they go through while doing so. In his free time, he likes to nerd about watches, Formula 1 and football. ... Read More