India is thus planning to make a semi-conductor for the world and the development of this industry will be done by adopting a holistic approach. Semi-conductor business is likely to contribute to the $1 trillion digital economy as India plans to reach the $5 trillion mark by 2025-26.
On Wednesday, the Indian government announced a package of Rs 76,000 crore to create a comprehensive ecosystem for semiconductor chip design, manufacturing and packaging. The government has also announced that this will provide employment to more than 1.35 lakh persons and will help in creating an independent intellectual property for India as well. The policy not only encourages manufacturing of chips in the country but also addresses other aspects like design and packaging. The ongoing semiconductor shortage has paralyzed many industries and adversely affected the automobile industry. According to the Investment Information and Credit Rating Agency of India (ICRA), the reduction in production due to shortage of semiconductors will result in less sales of five lakh cars this year.
According to ICRA, the sales of cars this year will be five lakh less due to reduction in production due to shortage of semiconductors.
Speaking to ET, Union Minister of Electronics and Information Technology Ashwini Vaishnav said, “India will provide a 20-year roadmap where the focus will be on generating and nurturing talent. There is a very important agreement in this agreement which is C2S. (Chips to Startup) The collaboration of 60 institutions will create 85,000 highly talented engineers over the next few years. Dollars are available everywhere but it is the brain that matters.”
The development of the ecosystem will have to be seen in a big way and incentives will mean a lot to the industry. Some of these incentives have been charted and include
- Government assistance up to 50% of the project cost for semi-conductor and display fabs
- Assistance up to 30% of capital expenditure for setting up compound semi-conductor/silicon photonics/sensor fab and semi-conductor packaging facilities
- Design Linked Incentive Scheme up to 50% of eligible expenditure
- Product Deployment Associated Incentive 6 percent – 4 percent on net sales for 5 years.
The ongoing semiconductor shortage has paralyzed many industries and adversely affected the automobile industry.
India is thus planning to make a semi-conductor for the world and the development of this industry will be done by adopting a holistic approach. Semi-conductor business is likely to contribute to the $1 trillion digital economy as India plans to reach the $5 trillion mark by 2025-26. The production target has been set at $957 million over the next 20 years. The government also expects that exports will reach Rs 5.15 lakh crore in the next 20 years and hence this move of Make-in-India for the world is also important for the growth of the economy.
India has already reached the level of $75 billion when it comes to electronics business and that ecosystem has boosted people’s confidence. Vaishnav added. “We are on track to reach $250 billion by 2025. And I am conservative because the industry thinks it will be $300 billion. There is a good ecosystem today that can consume these chips and that gives people confidence. In the coming 4- 6 months you will see a lot of action when it comes to approvals for chip makers.”