Beyond Rs 76k-crore: Government to scale up semiconductor package

Government is looking at rolling out a fresh multi-billion-dollar incentive package for semiconductor companies after nearly exhausting the INR 76,000-crore plan that was launched in Dec 2021 for supporting investing companies, top sources told TOI.

Preliminary work on the new package, which is “in all likelihood be much bigger than the previous one”, has already begun, even though announcements in this regard will be made only once the new govt takes charge post the national elections, they said.

“The new package would be one of the key agendas for the new govt and will be taken up on a priority basis,” one of the sources said, pointing out that new proposals that are coming in for semiconductors necessitate a fresh package.

“The matter would be tabled before the new Cabinet as some of the proposals are at an advanced stage and would require immediate assurances from the state in terms of incentives,” the source said.

Success of Dec 2021 package is prompting the govt to work out a new one, especially in view of the aggressive stance of countries such as the US and China, which have announced much bigger packages for companies that are investing in semiconductors.

Under the current plan, govt extends fiscal support of up to 50% of a project’s cost to eligible display and semiconductor fabricators. This has been almost exhausted after the spate of investments that came in.

India, which had previously failed to get any credible proposals for semiconductor manufacturing after trying for decades, finally managed to score big after American Micron emerged as the first major player to enter the space with a INR 22,500-crore testing and packaging unit in Gujarat in June last year.

This was followed up with approval to three proposals worth nearly INR 1.3 lakh crore in Feb this year. These comprise: INR 91,000-crore project of Tata Electronics to set up India’s first semiconductor fab unit with Taiwanese Powerchip Semiconductor Manufacturing Corp at Dholera in Gujarat; INR 27,000-crore Semiconductor Assembly and Test (TSAT) unit by Tata in Morigaon, Assam; and INR 7,600-crore project of CG Power with Japanese Renesas Electronics and Stars Microelectronics of Thailand.

Govt has now received new proposals which are at a very advanced stage of discussions. These include a display fab unit proposal – the country’s first – by Japanese Sharp that can see investments of up to INR 40,000 crore. There is also a INR 90,000 crore plan of Israel’s chipmaker Tower Semiconductors for investments in India.

“The proposals need urgent solutions, especially as the companies want clarity from govt on incentive support,” the source added.