Government offers 50 percent incentive for chip production in India

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

The cabinet approved changes to the “Semiconductor Development Program and Display Manufacturing Ecosystem in India”.

Under the amended program, unified fiscal support of 50 percent of project costs will be provided to all technology hubs for setting up Semiconductor Fabs.

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Given the niche technology and nature of compound semiconductors and advanced packaging, the amended program will also provide, in pari-passu mode, fiscal support of 50 percent of the capital expenditures to set up compound semiconductors/silicon photonics/sensors/discrete semiconductors and ATMP/OSAT , according to an official statement released after the cabinet meeting.

The program has attracted many global semiconductor players to set up factories in India. The amended program will accelerate investment in semiconductor and display manufacturing in India. Based on consultation with potential investors, it is expected that the first semiconductor facility can be set up shortly.

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An advisory committee composed of global experts from industry and academia was established to advise India Semiconductor Mission, the hub for the semiconductor development program and display manufacturing ecosystem in India.

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

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The technology nodes of 45nm and above are in high demand driven by Automotive, Power and Telecom applications, among others. In addition, this segment makes up about 50 percent of the total semiconductor market, the Ministry of Electronics & IT said in the statement.


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