India is set for a big semiconductor boost as it races to catch up in chipmaking.

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India is set for a big semiconductor boost as it races to catch up in chipmaking.

India is poised to significantly bolster its semiconductor industry, as the government ramps up efforts to compensate for lost time in chip manufacturing. According to a report by ToI on April 29, the Indian government is actively pursuing a substantial new stimulus package, supplementing the Rs 76,000-crore incentives previously disbursed.

Launched in December 2021, the initial incentive package aimed to support semiconductor companies and encourage investment in the sector. However, with funds nearly depleted, there’s a pressing need for further investment to propel India’s semiconductor ambitions.

The forthcoming package is anticipated to surpass its predecessor in scale, with official announcements expected following the formation of a new government. Sources cited in the report emphasize the new package as a top priority for the incoming administration, with numerous semiconductor proposals already under consideration.

Driven by the success of the December 2021 initiative, the government is spurred to develop a more robust plan, especially in light of aggressive semiconductor investment strategies from nations like the US and China.

Currently, the government offers fiscal assistance covering up to 50% of project costs for eligible semiconductor fabricators and display manufacturers. However, this support is nearing depletion due to recent investment surges.

Previously, India faced challenges in attracting viable semiconductor manufacturing proposals despite prolonged efforts. However, notable milestones have been achieved, such as American Micron’s establishment of a Rs 22,500-crore testing and packaging unit in Gujarat in June last year.

Further momentum was gained with approvals for three significant projects totaling nearly Rs 1.3 lakh crore in February of this year. These projects include Tata Electronics’ Rs 91,000-crore semiconductor fabrication unit in collaboration with Taiwanese Powerchip Semiconductor Manufacturing Corp, among others.

Additional proposals are currently in the advanced stages of discussion, including a display fab unit by Japanese Sharp, potentially drawing investments of up to Rs 40,000 crore and a Rs 90,000-crore investment plan from Israel’s Tower Semiconductors.

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