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Meity receives proposals from joint ventures to setup Semiconductor chips and display fabrication un

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Meity receives proposals from joint ventures to setup Semiconductor chips and display fabrication un

  • The Ministry of Electronics and Information Technology (MeitY), in a release, said it has received five applications for setting up of semiconductor fabrication and display fabrication units with a total investment commitment of $20.5 billion (Rs 1.53 lakh crore).
  • The Cabinet had approved a Rs 76,000-crore plan for semiconductor and display manufacturing ecosystem in the country last year
  • As a part of the plan, the Centre has lined up incentive support for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging and semiconductor design.

Govt. incentives for semiconductor chip manufacturers

  • The central government will provide incentive for setting up of silicon complementary metal oxide semiconductor
  • The chip fabrication units that manufacture technology nodes of 28 nm or lower will get up to 50 per cent of the project cost as incentive
  • while for above 28 nm but up to 45 nm, 40 percent of the unit cost will be provided as incentive

Importance of Semiconductor manufacturing:

  • The sudden surge in demand of chips and semiconductor components has underpinned the need to establish a robust semiconductor ecosystem in India.
  • Several sectors, including auto, telecom, and medical technology suffered due to the unexpected surge leading to the scarcity of chips manufactured by only a few countries.

Importance of such a scheme:

  • Economic progress: It is expected to facilitate the growth of at least 20 such companies which can achieve a turnover of more than ₹1500 crore in the coming five years, according to MeitY.
  • Reduce dependencies on a few countries or companies.
  • Help in Meeting demand & supply gap: The inception of new companies will help in meeting the demand and supply and encourage innovation in India, NXP, a Dutch semiconductor multinational.
  • Attracting existing and global players: as it will support their expenditures related to design software, IP rights, development, testing and deployment.
  • Boost domestic manufacturing capacities: It will boost the domestic companies, start-ups, and MSMEs to develop and deploy the semiconductor design.
  • It will also help global investors to choose India as their preferred investment destination.

Similar steps taken by other countries:

  • Currently, semiconductor manufacturing is dominated by companies in the U.S ,Japan, South Korea, Taiwan, Israel and the Netherlands.
  • They are also making efforts in solving the chip shortage problem.
  • U.S President Joe Biden wants to bring manufacturing back to America and reduce the country’s reliance on a small number of chipmakers based largely in Taiwan and South Korea.
  • These chipmakers produce up to 70% of the world’s semiconductors, according to estimates by NXP semiconductors.
  • The European Commission has also announced a public-private semiconductor alliance with the goal of increasing Europe’s chip production share to 20% by 2030.
  • South Korea has offered various incentives to attract $450 billion in investments by 2030.

The Present scenario In India

  • More than 90% of global companies already have their R&D and design centres for semiconductors but never established their fabrication units.
  • Although India has semiconductor fabs in Mohali and Bangalore, they are purely strategic for defence and space applications only.

Challenges in making semiconductors in India:

  • Capital intensive: Setting up fabs is capital intensive and needs investment in the range of $5 billion to $10 billion.
  • Lack of investments and supportive government policies.
  • Government clearance: New fabs use sub 5 nanometer technology that requires clearance from both the technology provider and the Government.
  • Geopolitical situations come into play to build new fabs.
  • Infrastructure needs like connectivity to airports, seaports and availability of gallons of pure water as challenges to set up fabs in India.

Potential in India:

  • Back-end supply chains: several gases and minerals which are a part of the global semiconductor supply chain are produced in India.
  • Human resources: We also have excellent colleges which can produce highly skilled engineers for semiconductor manufacturing.
  • Pace of growth: The semiconductor industry is growing fast and can reach $1 trillion dollars in this decade. India can grow fast and reach $64 billion by 2026 from $27 billion today.
  • Domestic manufacturing has picked up already: Mobiles, wearables, IT and industrial components are the leading segments in the Indian semiconductor industry contributing around 80% of the revenues in 2021.

Conclusion:

  • the semiconductor incentive scheme can contribute in shaping India as an efficient, equitable, and resilient design and manufacturing hub of these chips and it will also decrease its dependence on other countries for chip import and contribute in direction of Atmanirbhar Bharat

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