Prime Minister Narendra Modi has some big plans. Among them, is his dream of making India a semiconductor manufacturing hub. Around the world, semiconductors have gained tremendous prominence, and it would suffice to say that they have become crucial to humans in the 21st century. Usually made of silicon, semiconductors are a strategic technological asset in today’s globalised world. From car batteries to laptops to smartphones to household appliances to gaming consoles and everything in between, semiconductors perform the fulcrum of the job in powering smart electronic devices. Now, the Modi government is planning to offer a massive incentives package to semiconductor manufacturers from around the world to set a base in India.
According to Bloomberg, India is finalising an incentive package of more than $10 billion to attract companies to start manufacturing semiconductors in the country. According to highly placed sources directly in the know of all that is happening on the microchip front, the government will offer incentives of 760 billion rupees (US$10.2 billion) over six years for domestic production of semiconductor fabs, display fabs, design and packaging to cut down dependence on imports. The Union Cabinet will soon take up this package for approval.
India planning $10 billion incentive package for #semiconductor manufacturers, reports Bloomberg.
— BloombergQuint (@BloombergQuint) December 2, 2021
The Bloomberg report added that the proposed plan includes the government providing up to 50% of capital expenditure to companies selected for manufacturing semiconductor fab along with providing design-linked incentives. The package is likely to be over and above the SOPs provided last year under production-linked incentives for the manufacturing of electronic components and semiconductors. According to government estimates, the $10 billion incentive package will help attract semiconductor investments to the tune of 1.7 trillion rupees (US$24 billion) in the next six years.
Modi and India’s Semiconductor Revolution
Narendra Modi is no ordinary prime minister. He is a man who is determined to turn India into a global power to be reckoned with. With the 760 billion rupees incentive package for semiconductor manufacturers, PM Modi is ensuring that India seizes the moment and emerges as a favoured destination for microchip manufacturers. All strong countries today want to domestically produce semiconductors – owing to their extreme importance across several walks of life.
The time to secure semiconductor investments is now, as manufacturers around the world scout for newer pastures. The global semiconductor shortage has prompted manufacturers to diversify their country portfolios and set up bases in various nations. Interestingly, manufactures are looking to manufacture in a country that incentivises them, minus China. The Communist nation is nowhere in the picture when it comes to attracting microchip manufacturers, and India is taking advantage of the same.
India is all set to get its first semiconductor production facility by late next year. As reported by TFI, Tata Group is all set to invest close to $300 million in an outsourced semiconductor assembly and test (OSAT) plant. An OSAT plant sources silicon wafers from semiconductor foundries, packages, assembles and tests them, finally turning them into finished semiconductor chips. For the same, Tata is in talks with at least three states – Karnataka, Telangana and Tamil Nadu. The final venue of the OSAT plat could be finalised this month, with operations beginning by late 2022.
Separately, the Modi government is in advanced talks with Taiwan over bringing a chip plant worth an estimated $7.5 billion to India to supply everything from 5G devices to electric cars. It is also scouting for possible locations with adequate land, water and manpower to help the Taiwanese manufacturers set up factories.
The world is facing a chip shortage. Companies are increasingly decoupling from China, and the demand for Taiwanese semiconductors has shot up. However, there are not enough semiconductor manufacturing facilities around the world that can keep up with the soaring demand for these electronic chips. Therefore, India’s push for attracting semiconductor firms to manufacture in the country could not have come at a better time.