On the same day that the US Department of State revealed its collaboration with India’s Semiconductor Mission (ISM) under the Union Electronics and IT Ministry to explore opportunities for expanding the global semiconductor ecosystem, reports have emerged that ISM is gearing up to introduce a new incentive package to attract foreign chipmakers, packagers, testers, and component suppliers.
A Livemint report, citing Akash Tripathi, the chief executive officer of ISM, noted that a specific incentive value has not yet been finalised. He mentioned that the package would also include incentives for components, which is a new addition.
Speaking at a press conference on Monday, coinciding with ISM’s announcement of a partnership with the US for semiconductor development, Tripathi emphasised that the aim is to support the industry with appropriate incentives for the next decade. He also highlighted that about 20 new proposals are currently under evaluation, including those for full-scale fabrication plants, assembly, testing, and packaging facilities.
The upcoming incentive package is expected to exceed $10 billion, the report said, citing two government officials.
India’s semiconductor incentives
India’s first initiative to provide semiconductor incentives had a similar outlay of $10 billion over six years. In December 2021, the government introduced the production-linked incentive (PLI) scheme aimed at encouraging the establishment of semiconductor and display fabrication units, as well as chip packaging, assembly, and testing facilities. However, a separate allocation of $440 million was designated under the Scheme for Promotion of Manufacturing of Electronics (SPECS) for component production.
The semiconductor partnership with the US
The announcement of the new incentive package coincided with the US Department of State’s declaration of a partnership with ISM to expand and diversify the global semiconductor ecosystem. The collaboration falls under the US’s International Technology Security and Innovation (ITSI) fund, a $500-million initiative introduced as part of the Creating Helpful Incentives to Produce Semiconductors (Chips) and Science Act in August 2022.
Both countries are set to conduct a joint survey of their respective semiconductor ecosystems, after which “potential joint initiatives to strengthen and grow this critical sector” will be identified. Livemint reported that the fund could eventually include commercial chip agreements in the future, which might serve important sectors such as defence and consumer industries.
In addition, Tripathi revealed that there are ongoing discussions to modernise the Semi-Conductor Laboratory (SCL), India’s only operational chip fabrication unit. He noted that several proposals for modernisation have already been received, and the government is working out the specifics.
Tripathi also shared that the government, under his leadership, has approved incentives amounting to Rs 1.52 trillion ($18.1 billion). Further announcements regarding key proposals are anticipated as the first edition of ‘Semicon India’ kicks off in Greater Noida, Uttar Pradesh.
India’s chipmaking ecosystem progress
India’s efforts to build a semiconductor ecosystem have already seen significant progress, with Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Company (PSMC) receiving approval for an $11-billion chip fabrication plant. Additionally, four outsourced semiconductor assembly and testing (OSAT) facilities have been approved by ISM.
Further facilities have been announced, including a partnership between China’s Foxconn and Noida-based HCL Technologies, and a $10-billion chip fabrication facility in Maharashtra, a joint project between Israel’s Tower Semiconductor and India’s Adani Group, according to the state government.
Tripathi, however, clarified that while ISM is reviewing an application from Tower Semiconductor, he did not confirm whether the Adani Group is involved in the project.
Possible challenges
Despite the positive developments, challenges remain. According to Yee-Shyi Chang, technology ambassador of Taiwan to India for the India Cellular and Electronics Association (ICEA), India will need to train at least 10,000 engineers annually in semiconductor manufacturing to become a viable hub for global chipmakers, Mint reported.
Chang observed that India has an advantage over the US in terms of talent availability, but it will take 10 to 15 years for the country’s semiconductor industry to mature.
First Published: Sep 10 2024 | 9:48 AM IST
