Govt invites applications for semiconductor fabs from June 1

The government has decided to invite new applications for setting up semiconductor fabs and display fabs in India beginning June 1 under the Modified Semicon India Programme, the Ministry of Electronics and IT said on Wednesday. The application will be received by India Semiconductor Mission (ISM), which is the governing body of the Modified Semicon India Programme. The development comes 15 months after the first closing round of Semicon India Programme.

"The application window of Modified Scheme for setting up of Compound Semiconductors / Silicon Photonics/Sensors Fab/Discrete Semiconductors Fab and Semiconductor ATMP/OSAT facilities in India is open till December 2024," the ministry said in a statement. The application window of the Design Linked Incentive (DLI) Scheme is also open till December 2024. As of May 31, 26 applications have been received under DLI Scheme and five applications have been granted approval.

Union Minister Rajeev Chandrasekhar said that ISM will accept applications from both new and existing applicants. "ISM @Semicon_India is today announcing that it will start accepting n considering new applicants for fabs from new & existing applicants. First window for more expensive 28nm fabs was kept open for 45 days only in Jan2022 and received 3 applications that were evaluated by ISM n its Advisory group. Strategy now is also encouraging mature nodes of >40nm - current n new players may apply afresh in various nodes that they hv technology for. It is expected that some of the current applicants will reapply n new fresh investors will also apply," Chandrasekhar said in a tweet.

Under the Modified Programme, the fiscal incentive of 50% of the project cost is available to companies/consortia/ joint ventures for setting up semiconductor fabs in India of any node (including mature nodes). Similarly, the fiscal incentive of 50% of the project cost is available for setting up display fabs of specified technologies in India. Semicon India Programme was launched in December 2021, with an outlay of ₹76,000 crore for the development of the semiconductors and display manufacturing ecosystem in India. The government had then said, "The setting up of 'India Semiconductor Mission' will drive this sector. Incentives of ₹2.3 lakh crore will be given."

The programme was later modified in view of the aggressive incentives offered by countries already having an established semiconductor ecosystem and a limited number of companies owning advanced node technologies.

"The modified programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem. This will serve to pave the way for India's growing presence in the global electronics value chains," the ministry said.

In the union budget 2023-24, the government has allocated ₹16,539 crore to the Ministry of Electronics and Information Technology. Of this, ₹3,000 crores has been allocated for the Semiconductor Mission in India which will help in the development of the semiconductor and display manufacturing facility in the country.

Notably, Anil Agarawal-led Vedanta, which is planning to install the country’s first semiconductor manufacturing facility in Gujarat, is likely to be the key applicant under this programme. The company will reportedly reapply under the programme after the government rejected its previous application owing to the failure in meeting the criteria.

 In September last year, Vedanta and Taiwan-based Hon Hai Technology Group, the parent company of electronics manufacturing giant Foxconn, signed a memorandum of understanding to set up a chip manufacturing facility in Dholera Special Investment Region (SIR) in Gujarat with an investment of ₹1.54 lakh crore.

Semiconductor is a key component in the manufacturing of electronic devices, mobile phones, and cars and electric vehicles. Currently, Taiwan accounts for more than 90% of the semiconductor manufacturing in the world, followed by the Netherlands, and South Korea.