Faced with global chip shortage, which has majorly impacted Indian industries, the government on Wednesday announced a $10 billion incentive plan to attract semiconductor and display manufacturers as part of a deepening push to establish the country as a global electronics production hub.

Under the plan, passed by the Indian cabinet, the  government will extend fiscal support of up to 50 percent of a project’s cost to eligible display and semiconductor fabricators, an official statement said.

The government hopes that comprehensive programme for the development of sustainable semiconductor and display ecosystem in the country would provide a globally competitive incentive package to companies.

This shall pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance, a government statement explained.

Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0, the government feels.

The programme aims to provide attractive incentive support to companies /consortia that are engaged in silicon semiconductor fabs, display fabs, compound semiconductors/silicon photonics/sensors (including MEMS) fabs, semiconductor packaging (ATMP /OSAT) and semiconductor design.

The statement said the federal government will work closely with State Governments to establish high-tech clusters with requisite infrastructure in terms of land, semiconductor grade water, high quality power, logistics and research ecosystem to approve applications for setting up atleast two greenfield semiconductor fabs and two display fabs in the country.

Ministry of Electronics and IT would be mandated to explore the possibility of JVs of semiconductor lab with a commercial fab partner to modernize the brownfield fab facility.

The design klinked incentive (DLI) scheme shall extend product design linked incentive of up to 50 percent of eligible expenditure and product deployment linked incentive of 6-4 percent on net sales for five years.

Support will be provided to 100 domestic companies of semiconductor design for integrated circuits, chipsets, system on chips, 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 over the next five years.

With the approval of the programme for development of semiconductors and display manufacturing ecosystem in India with an outlay of Rs.76,000 crore (10 billion USD), the government announced incentives for every part of supply chain, including electronic components, sub-assemblies, and finished goods.

Incentive support to the tune of Rs.55,392 crore (7.5 billion USD) have been approved under PLI for larges 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 (USD 13 billion) are approved for allied sectors comprising ACC battery, auto components, telecom and networking products, solar PV modules and white goods. In total, India has committed support of Rs. 2,30,000 crore (USD 30 billion) to position India as global hub for electronics manufacturing.