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Cabinet Decisions: Chip, display units: Nod to Rs 76K-cr scheme

🔴 The policy, apart from giving incentives for setting up of plants to manufacture high quality semiconductors, also plans to enable over the next decade training of 85,000-1,00,000 engineers and technicians who can work in these plants, Electronics and IT Ministry officials said.

By: ENS Economic Bureau | New Delhi |
Updated: December 16, 2021 7:11:25 am
cabinet decision, cabinet briefingUnion ministers Anurag Thakur and Ashwini Vaishnaw after cabinet meeting during the ongoing Winter Session of Parliament, in New Delhi, on Wednesday (PTI photo)

In what would be yet another attempt by the Centre to have domestic manufacturing capacity of semiconductors, the Union Cabinet Wednesday cleared a Rs 76,000 crore policy programme for semiconductor and display manufacturing ecosystem in the country.

The new policy, apart from giving incentives for setting up of plants to manufacture high quality semi-conductor chips also plans to enable, over the next ten years, training of 85,000-100,000 engineers and technicians who can work in these plants, ministry officials said.

According to an official statement, the scheme is expected to provide a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design.

The move assumes significance at a time when there is a global shortage of semiconductor products and large chipmakers including Intel, TSMC, Texas Instruments, etc are looking to add capacity. In India, the Tata Group has expressed plans to foray into semiconductor manufacturing.

Notably, the Centre has made at least two attempts to establish semiconductor manufacturing capacity in India in the recent years but without any avail. Last year, the government had invited companies to set up semiconductor fabrication units but not single bid was received by the April 30, 2021 deadline.

Prior to that, the government had in 2017 offered a wavier of customs duty on import of machinery and necessary equipment to foreign companies wanting to set up semiconductor facilities in India but that did not elicit any response either. Similar sops were offered in 2013 as well by the UPA government but without any success.

The programme will give an impetus to semiconductor and display manufacturing by facilitating capital support and technological collaborations. The government has lined up incentive support for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensors fabs, semiconductor packaging and semiconductor design.

The scheme for setting up of semiconductor fabs and display fabs in India will extend fiscal support of up to 50 per cent of project cost to eligible applicants.

The Centre will work closely with the state governments on high-tech clusters with requisite infrastructure in terms of land, semiconductor grade water, power, logistics and research ecosystem, to approve applications for setting up at least two greenfield semiconductor fabs and two display fabs in the country.

The Ministry of Electronics and IT will take requisite steps for modernisation and commercialisation of Semi-Conductor Laboratory (SCL). The IT Ministry will explore the possibility for the Joint Venture of SCL with a commercial fab partner to modernise the brownfield fab facility.

“The Scheme for setting up of compound semiconductors / silicon photonics / sensors fabs and Semiconductor ATMP / OSAT facilities in India shall extend fiscal support of 30 per cent of capital expenditure, to approved units,” the statement said.

At least 15 such units of compound semiconductors and semiconductor packaging are expected to be established with government support under this scheme. A Design Linked Incentive (DLI) scheme will offer incentive of up to 50 per cent of eligible expenditure and product deployment linked incentive of 6-4 per cent on net sales for five years.

The Cabinet also approved incentive scheme for promotion of RuPay Debit Cards and low value (up to Rs 2,000) BHIM-UPI transactions (Person-to-Merchant) in the country. Under the scheme, the acquiring banks will be incentivised by the government, by way of paying percentage of value of transactions (P2M) done through RuPay Debit cards and low-value BHIM-UPI modes of payments, at an estimated financial outlay of Rs 1,300 crore for a period of one year effective April 1, 2021, the statement said.

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