Union Cabinet announces Rs 76,000 crore PLI scheme for semiconductors

In what is good news for India Auto Inc, the Union Cabinet has cleared a production-linked incentive scheme (PLI) worth over Rs 76,000 crore for semiconductor production over the next six years. 

The development, though expected, comes at a time when the country's auto sector like its global peers is witnessing a severe crunch of semiconductors, prompting many OEMs to cut down on their production, thereby failing to meet the impending demand especially in the passenger vehicle segment. 

The scheme outlines incentives of up to 25% on capital investments made by the producers in setting up of compound semiconductor wafer fabrication, assembly, testing and packaging facilities. Telecom and IT minister Ashwini Vaishnaw during a news briefing informed that the scheme is expected to encourage over 100 local companies in the fields of semiconductor design circuit and chipsets apart from training over 85,000 semiconductor engineers to make it a complete ecosystem. Further, the scheme also envisages design linked incentive (DLI) for which about half of the cost is expected to be borne by the Government. The scheme also  outlines incentives of upto 25% on capital investments made by the producers in setting up of compound semiconductor wafer fabrication, assembly, testing and packaging facilities

Some of the leading global and Indian companies including Foxconn, Tower Semiconductor and Tata Group amongst others have evinced strong interest in setting up semiconductor plants in India.

As per an RTI reply received by Autocar Professional earlier this year, an Executive Committee of Department of Electronics & Information Technology (MeitY) has recommended 13 applications out of the total 34 received towards manufacturing of electronic components and semiconductors. PICL, Hical Technologies, IFB Industries, Tata Electronics, Salcomp Technologies, Continental Device, Panacea Medical Technologies, Deki Electronics and Tibrewala Electronic are amongst some of the leading domestic and global companies that find their name in the recommendation. 

India's electronics system market is expected to grow by 2.3 times of its current size reaching $160 billion by 2025 a report prepared by industry body  Indian Electronic and Semiconductor Association ( IESA) revealed. 

Sanjay Gupta, MD, NXP India: “The approval of Rs 76,000 crore Product-Linked Incentive (PLI) scheme for semiconductors under which Rs. 2.3 lakh crore of incentives will be given is a welcome move. This will enable India to become an electronics hub and encourage corporates to start manufacturing in India. It is a big step to bring India on the world map of the semiconductors industry as it will pave the path for the industry to broader the horizon of research, manufacturing and export. In the long-term issues like sudden surge in demand of semiconductors will also be addressed. This move will also make the Indian manufacturers globally competitive to attract investment in the areas of core competency and cutting-edge technology.”

Baba Kalyani, chairman and MD, Bharat Forge: “I congratulate the Prime Minister and the government of India for today’s landmark decision to extend $10 billion support to develop semiconductors and display manufacturing in India. This strategic and pathbreaking move shall lay foundations to a much needed indigenous and integrated electronics design and manufacturing ecosystem – bedrock of any developed economy in the digital and Industry 4.0 era. I am confident, this will now set-in-motion a longer-term process to transform India into an innovation driven economy with focus on high-end capability, skills and value-creation, here in India!”