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India’s Electronics Manufacturing at U$74.7 Billion in FY21

Over the last few years, the government has been focused on building India’s semiconductor ecosystem, which has helped boost electronics manufacturing and innovation. As a result of several public initiatives, the domestic production of electronic goods increased substantially from US$ 37 billion in 2015-16 to US$ 74.7 billion in 2020-21, growing at a compound annual growth rate (CAGR) of 17.9%.

Policies to support growth include the Production Linked Incentive (PLI) Schemes, the Scheme for the Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), and the Modified Electronics Manufacturing Cluster (EMC 2.0).

Earlier this year, Narendra Modi, the country’s Prime Minister, approved the Semicon India programme. It has a total outlay of IN 76,000 crores (US$ 9.5 billion) to develop the semiconductor and display manufacturing ecosystem. It will financially support companies investing in semiconductors, display manufacturing, and design. The government expects this to increase the country’s presence in global electronics value chains, a press release stated.

The Semicon India programme consists of four schemes:

A scheme to set up semiconductor fabs in India: this provides fiscal support to eligible applicants to launch semiconductor fabs, aimed at attracting large investments to establish semiconductor wafer fabrication facilities in the country. The following financial support has been approved under the scheme:

  • 28nm or lower: up to 50% of the project cost
  • Above 28nm to 45nm: up to 40% of the project cost
  • Above 45nm to 65nm: up to 30% of the project cost

A scheme to set up display fabs in India: this provides fiscal support to eligible applicants to set up display fabs to attract investments to launch TFT LCD/AMOLE- based display fabrication facilities in India. The scheme provides financial support of up to 50% of the project cost subject to a ceiling of INR 12,000 crores (US$ 1.5 billion) per fab.

A scheme to set up compound semiconductors/silicon photonics/sensors fab and semiconductor assembly, testing, marking, and packaging (ATMP)/OSAT facilities: the scheme provides fiscal support of 30% of the capital expenditure to eligible applicants.

The design-linked incentive (DLI) scheme: it offers financial incentives and design infrastructure support across various stages of the development and deployment of semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs), IP cores, and semiconductor-linked designs.

In addition to the above schemes, the government has also approved the modernisation of the semiconductor laboratory, Mohali as a brownfield Fab. Applications have been invited under various schemes for the setting up of semiconductor facilities. So far, 23 applications have been received which are under evaluation, the release stated.

Setting up semiconductor units requires huge investments and suitable infrastructures like the availability of uninterrupted power and clean water. Further, semiconductor manufacturing is a very complex and technology-intensive sector with huge capital investments, high risks, long gestation and payback periods, and rapid changes in technology that require significant and sustained investments. However, the government is committed to developing the semiconductors and display manufacturing ecosystems in India.

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