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Indian government invites proposals to set up electronic chip plants

The government has invited proposals from organisations to set up electronic chip manufacturing units in the country and even acquire companies making semiconductors overseas.

The expression of interest (EoI) floated by the Ministry of Electronics and Information Technology (MeitY) said that the government is keen to incentivise and attract investment for semiconductor fabrication units in India.

“The MeitY invites EoI from companies/consortia desirous to setting up/expansion of existing semiconductor wafer/device fabrication (FAB) facilities in India or acquisition of Semiconductor FABs outside India”, the EoI document said.

According to a news report, the Ministry set 31 January 2021 as the last date for submitting the proposal. MeitY said establishing semiconductor plants is important as the country is poised to increase its share in global manufacturing of mobile phones, IT hardware, automotive electronics, industrial electronics, medical electronics, Internet of Things (IoT), and other devices in the near future. It aims to have US$400 billion worth of electronics manufacturing by 2025.

The government had approved two semiconductor units in 2013. However, both the units could not be set-up due to a lack of an electronics manufacturing ecosystem in the country and policy-linked market support, the report noted.

Along with the production-linked incentive scheme for electronics manufacturing, MeitY had announced a scheme to promote the manufacturing of electronic components and semiconductors and a budget for eight years.

Furthermore, the domestic manufacturing of electronic gadgets, including mobile phones and components, televisions, and laptops, is expected to contribute one-fifth to India’s economy by 2025, communications, according to the MeitY Minister, Ravi Shankar Prasad.

Speaking at the Associated Chambers of Commerce and Industry of India (ASSOCHAM) Foundation Week in a session titled “Digitalisation roadmap to support the growth of the Indian economy,” he claimed that by 2025, India will be able to manufacture one billion phones, 50 million televisions, and 50 million pieces of hardware, including laptops and tablets. The idea is to make India a global hub of mobile manufacturing as it has the talent, innovation, and potential to be so.

He stated that the government plans to extend the production-linked incentive (PLI) scheme to the domestic manufacturing of laptops and tablets, following the success of a scheme to locally produce mobile phones and their components. Sixteen global and domestic mobile and electronic component makers will benefit from the government’s PLI scheme that was launched in April to boost local manufacturing, a news report noted.

The Minister added that Prasad said, “…India should not compromise on its data sovereignty because data as an economy is emerging globally, and there is going to be big competition for monopolising data. India will not compromise on data sovereignty.”

Under the PLI scheme for mobile phones, the government will give a 4-6% incentive to eligible electronic companies on incremental sales of manufactured goods—mobile phones and electronic components such as printed circuit boards and sensors, among others—for five years. Over the period, the scheme is expected to result in production worth ₹10.5 trillion, out of which more than 60% will be contributed by exports. The scheme is expected to create 300,000 direct jobs.

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