Government To Focus On High Tech Clusters To Support Local Semiconductor Production

With China falling short of world expectations post the emergence of Coronavirus, India has decided to invest in its own semiconductor manufacturing.  According to Indian leaders in the market, it is high time that India became self-reliant. The decision to do so has been supported by the Narendra Modi government, that is a huge proponent of Made-In-India products.

“The semiconductor consumption in India is growing at the rate of 15 percent at the back of the country’s burgeoning electronics manufacturing industry. We are right now seeing 100 percent imports vis-à-vis the country’s semiconductors needs. In 2020, India spent $15 billion in electronics imports, with 37 percent of these being imported from China. The demand, however, is only set to increase with the introduction of 5G and growing consumption and production of electronics,” says Neeraj Bansal, Partner – Risk Advisory and COO – India Global, KPMG in India.

The Center has all the plans to support industry initiatives in the field of semiconductor manufacturing. Towards this, the government, it is confirmed, has already come up with an Rs. 76,000 crore package for semiconductor and display manufacturing, which is likely to reduce the company’s dependence on imports in the future.

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The scheme for setting up of semiconductor fabs and display fabs in India will extend financial support of up to 50% of project cost on the pari-passu basis to applicants who are found eligible and have the technology as well as capacity to execute such highly capital intensive and resource incentive projects. 

This works well for India to reach its target of $300 billion in electronic manufacturing by 2025, which includes not just manufacturing electronics but components as well. For the full support of successful manufacturing, the government would be on the lookout for state governments to establish High-Tech Clusters.

These would need requisite infrastructure in terms of land, semiconductor grade water, high-quality power, logistics, and research ecosystem to approve applications for setting up at least two greenfield Semiconductor Fabs and two Display Fabs in the country.