Booster shot to chip, display industry - India okays 76k crore scheme

Illustration of the new brain AI chip
(Image credit: RMIT)

The Indian government has approved a comprehensive program for the development of sustainable semiconductor and display ecosystem in the country at a total cost of Rs 76,000 crore.

Apart from financial incentives, including under the PLI scheme for setting up semiconductor chip plants, the government also said it would provide training over the next 10 years to 85,000-100,000 engineers and technicians who can work in these plants.

The announcement has come as a good news for the beleaguered Indian industry, especially the automobile sector that has been particularly hard hit by the chip shortage.

PLI scheme for chip manufacturing

The government said that there are incentives for every part of supply chain including electronic components, sub-assemblies, and finished goods in semiconductors and display manufacturing ecosystem .

Breaking down the financial details of the Rs 76,000 crore program, the government said there is incentive support to the tune of Rs 55,392 crore ($7.5 billion) under the PLI scheme for Large Scale Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme. In addition, PLI incentives to the quantum of Rs 98,000 crore ($13 billion) are approved for allied sectors comprising ACC battery, auto components, telecom & networking products, solar PV modules and white goods. 

In total, the government has committed support of Rs 2,30,000 crore ($30 billion) to position India as global hub for electronics manufacturing with semiconductors as the foundational building block.

"The Scheme for setting up of semiconductor fabs and display fabs in India shall extend fiscal support of up to 50% of project cost on pari-passu basis to applicants who are found eligible and have the technology as well as capacity to execute such highly capital intensive and resource incentive projects," the government said.

Support for domestic chip design companies

In collaboration with State governments, high-tech clusters will be set up with requisite infrastructure in terms of land, semiconductor grade water, high quality power, logistics and research ecosystem. The government's plan is to approve at least two greenfield semiconductor fabs and two display fabs in the country.

The Design Linked Incentive (DLI) Scheme will provide product design linked incentive of up to 50% of eligible expenditure and product deployment linked incentive of 6% - 4% on net sales for five years. 

Support will be provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design and facilitating the growth of not less than 20 such companies which can achieve turnover of more than Rs 1500 crore in the coming five years, the government said.

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Balakumar K
Senior Editor

Over three decades as a journalist covering current affairs, politics, sports and now technology. Former Editor of News Today, writer of humour columns across publications and a hardcore cricket and cinema enthusiast. He writes about technology trends and suggest movies and shows to watch on OTT platforms.