Govt invites new applications for semiconductor manufacturing unit

India has invited new applications seeking incentives to set up a semiconductor manufacturing fab, after a joint venture (JV) between Vedanta Resources and Foxconn was reportedly denied the benefits under an ambitious government mission.

According to a Bloomberg report, the government has decided to deny incentives for Vedanta-Foxconn’s proposed 28-nanometer semiconductor manufacturing facility. This comes after the JV failed to find a technology partner or license manufacturing-grade technology for the fabrication plant in the nine months after it first announced plans.

“ISM (India Semiconductor Mission) @Semicon_India is today announcing that it will start accepting and considering new applications for fabs from new & existing applicants,” said Union Minister Rajeev Chandrasekhar on Twitter, responding to the Bloomberg story.

New applications for setting up semiconductor fabrication units in the country can be made from June 1, under the Modified Semicon India Programme. The application window is open till December 2024.

Though the Vedanta and Foxconn JV may file a new application to meet the government’s criteria for approval, the delay in receiving incentives worth 50 per cent of the development costs of the fabrication unit is considered to be a setback.

Chandrasekhar said that the first window for more expensive 28 nm fabs was kept open for 45 days in January 2022 and it received three applications that were evaluated by ISM and its advisory group. However, the minister did not disclose if any of these applications have been able to fulfil the criteria to claim incentives under the $10 billion production-linked incentive scheme for semiconductor manufacturing.

“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 current applicants will reapply n (sic) new fresh investors will also apply,” Chandrasekhar added.

The government’s semiconductor mission initially focused on encouraging the production of semiconductors with smaller nodes. The fabs producing semiconductors nodes of 45 nm to 65 nm could get the least incentive of 30 per cent. The government in September 2022 revised the semiconductor PLI scheme with uniform 50 per cent incentives of the project costs for all semiconductor nodes, from earlier 30, 40, and 50 per cent incentives for different nodes.

The applications will be received by ISM, the designated nodal agency entrusted with the responsibility of implementing the Modified Semicon India Programme for development of semiconductors and display manufacturing ecosystem in India.

Similarly, a fiscal support of 50 per cent of the project cost is available for setting up of Display Fabs of specified technologies in India. Application for the Design Linked Incentive (DL) are open till December 2024. Till date 26 applications have been received under DLI and five of them have got approval.