Centre contemplates capital support and PLI plan for manufacturing semiconductors

With the ongoing shortage of semiconductors, the government is looking at a production-linked incentive (PLI) plan and multi-billion-dollar capital support. This is an effort to push manufacturing of semiconductors in the country.

Sources told the ToI that this plan is being coordinated and monitored closely by the Prime Minister’s Office. Multi-ministries have been roped into the process as the government works overtime to finalize an attractive policy to attract semiconductor companies. Sources said the government is willing to talk capital support.

The Communications and IT Minister Ashwini Vaishnaw had told Financial Express in October 2021 that the semiconductor dream of India will be fulfilled soon. “It’s the Prime Minister’s dream to have semiconductors designed and made in India. We are working on developing the complete semiconductor ecosystem – for designing, manufacturing and packaging semiconductor chips.”

It should be noted that the government had recently held a high-level meeting on the matter, which had the Telecom and IT Minister Ashwini Vaishnaw; Principal Scientific Adviser K Vijay Raghavan; NITI Aayog member VK Saraswat; Minister of State for IT Rajeev Chandrasekhar; representatives from the electronics; IT and Telecom ministries; Defence Research and Development Organization (DRDO); surface transport; and space departments and the academia.

A source highlighted that the idea is to have representatives from various ministries and departments who are in-charge of industries that are impacted by the semiconductor shortage. India is seen as strong in the area of chip design, but has failed to get the much-touted fab manufacturing into the country which involves investments ranging between $5 billion and $10 billion. However, sources say the government is confident that a large and fast-growing electronics market, automobiles, space and new-age technologies such as 5G and internet of things (IoTs) will prompt companies to invest in India.

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India is already home to the largest semiconductor designers, with offices of Intel, AMD, Nvidia, Samsung and others spread across the country. But lack of experience, resources and technical knowhow are the key issues. Experts say factories need a constant uninterrupted supply of power and vast quantities of water, besides the technical knowledge and a supporting ecosystem.