Semiconductor Manufacturing in India: Government to Provide 50 Percent Incentive for Chip Fabs

The union cabinet chaired by Prime Minister Narendra Modi on Wednesday approved a proposal to provide 50 percent financial incentives for the manufacturing of semiconductor fabs across technology nodes as well as for compound semiconductors, packaging, and other chip facilities.

The cabinet approved modifications in “Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India.”

Under the modified programme, a uniform fiscal support of 50 percent of Project Cost shall be provided across all technology nodes for setting up of Semiconductor Fabs.

Given the niche technology and nature of compound semiconductors and advanced packaging, the modified programme shall also provide fiscal support of 50 percent of Capital Expenditure in pari-passu mode for setting up of compound semiconductors / silicon photonics / sensors / Discrete semiconductors fabs and ATMP/OSAT, according to an official statement released after the cabinet meeting.

The programme has attracted many global semiconductor players for setting up fabs in India. The modified programme, will expedite investments in semiconductor and display manufacturing in India. On the basis of discussion with potential investors, it is expected that work on setting up of the first semiconductor facility will commence soon.

An Advisory Committee comprising global experts from industry and academia was constituted to advise India Semiconductor Mission — the nodal agency for the Programme for the development of semiconductors and display manufacturing ecosystem in India.

Advisory Committee has unanimously recommended uniform support for all technology nodes of silicon semiconductor fabs / Silicon Photonics / Sensors / Discrete Semiconductor Fabs and ATMP/OSAT, which has been accepted by the Government.

The technology nodes of 45nm and above have high demand which is inter-alia driven by Automotive, Power and Telecom applications. Moreover, this segment constitutes around 50 percent of the total semiconductor market, the Ministry of Electronics & IT said in the statement.