The Union Cabinet has approved a 76,000 crore scheme to boost the country’s semiconductor and display manufacturing. The scheme would provide financial assistance of up to 50% of the project cost for the establishment of semiconductor and display fabrication units. According to the statement, the scheme aimed to make India a global hub for electronic system design and manufacturing. Furthermore, the Centre would collaborate with the states to establish high-tech clusters equipped with the necessary infrastructure, such as land and semiconductor-grade water. The Indian electronics business is rapidly expanding, with demand estimated to exceed USD 400 billion by 2023-24. Domestic output has increased from USD 29 billion in 2014-15 to roughly USD 70 billion in 2019-20.  The majority of this manufacturing occurs in final assembly units (last-mile businesses) situated in India, and focusing on them would aid in the development of deep backward connections, hence driving industrialisation.

Feature of the Program

• A specialised and independent India Semiconductor Mission (ISM) will be established to drive long-term strategies for developing a sustainable semiconductors and display ecosystem. ISM will be led by global semiconductor and display industry experts. It will serve as the nodal agency for the efficient and smooth implementation of the Semiconductor and Display ecosystem schemes.
• Semiconductor Design Companies: The Design Linked Incentive (DLI) Scheme will extend for five years a product design linked incentive of up to 50% of eligible expenditure and a product deployment linked incentive of 6% – 4% of net sales. 100 domestic semiconductor design companies will receive assistance with Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores, and semiconductor linked design.
• Production Linked Incentives: Under the PLI for Largest Scale Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme, and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme, incentive support totaling Rs.55,392 crore (7.5 billion USD) has been approved. Furthermore, PLI incentives totaling Rs.98,000 crore (USD 13 billion) have been approved for allied sectors such as ACC batteries, auto components, telecom & networking products, solar PV modules, and white goods.
• Semi-conductor Laboratory (SCL): MeitY will take the necessary steps to modernise and commercialise the Semi-conductor Laboratory (SCL). MeitY will investigate the possibility of SCL forming a joint venture with a commercial fab partner to modernise the brownfield fab facility.
• Semiconductor Fabs and Display Fabs: It would provide financial assistance of up to 50% of the project cost for the establishment of semiconductor and display fabrication units. The Union government will collaborate with the states to establish high-tech clusters that include the necessary infrastructure, such as land and semiconductor-grade water.
• Compound Semiconductors: It will provide fiscal support for up to 30% of approved capital expenditures. Under this scheme, at least 15 such units of Compound Semiconductors and Semiconductor Packaging are expected to be established with government assistance.

 Significance:

• Multiplier Effect: The advancement of the semiconductor and display ecosystems will have a multiplier effect on various sectors of the economy as they become more integrated into the global value chain.
• Boost to the Electronic Sector: The programme will usher in a new era in electronics manufacturing by offering a globally competitive incentive package to companies involved in semiconductor and display manufacturing, as well as design.
• Self-sufficiency: This will pave the way for India’s technological leadership in these strategic areas, as well as economic self-sufficiency.
• Employment: It will also create highly skilled job opportunities in order to capitalise on the country’s demographic dividend.
• Strategic Importance: In today’s geopolitical environment, trusted sources of semiconductors and displays are critical to the security of critical information infrastructure.

Way forward

• Semiconductors and displays are at the heart of modern electronics, powering the next stage of digital revolution under Industry 4.0.
• India must abandon its goal of swadeshi semiconductors. Instead, it should strive to become a significant participant in a trusted, plurilateral semiconductor ecosystem that keeps important competitors at bay.
• Favorable trade rules are essential for the development of a plurilateral semiconductor ecosystem.
• For the time being, the new goal should focus monetary assistance on other sections of the chip-making chain, such as design centres, testing facilities, and packaging.
• With the assistance of a global major, India’s PSEs like as Bharat Electronics Ltd or Hindustan Aeronautics Ltd can be utilised to establish a semiconductor fab foundry.
• To entice the microchip giants, the overall expenditure of the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) must be doubled from the existing Rs. 3300 crore.

How to structure:

1. Give an intro about semi conductor manufacturing in India
2. Discuss the features of Program for Development of Semiconductors and Display Manufacturing Ecosystem in India
3. Examine the significance of this move
4. Suggest further measures and conclude

Reference:

1. https://www.thehindu.com/opinion/editorial/when-the-chips-are-down-the-hindu-editorial-on-indias-semiconductor-mission/article37980954.ece