India’s push for semiconductors

India’s push for semiconductors

Subject : Science and technology

Section: Awareness in computers and IT

Concept :

• As part of its efforts to encourage the electronics supply chain to India, the Union Government has disbursed close to ₹1,645 crores through performance-linked incentives (PLI) for electronics manufacturers.
• There is a growing need for semiconductors as they are used in almost all modern electronics.
• Many countries are moving away from China’s dominance in the sector due to supply chain vulnerabilities and geopolitical pressures.

Semiconductor manufacturing

• Semiconductor fabrication units or fabs are manufacturing plants that help turn raw materials such as silicon into integrated circuits which are a part of almost all electronic hardware.
• Semiconductor fabrication units or fabs are highly capital-intensive undertakings and require billions of dollars in the case of large facilities.
• Fabs also require a highly reliable and high-quality supply of water, electricity, and insulation from the elements and a high degree of precision, cost and capital are required to make the sophisticated circuits.
• Countries across the world have now realised strategic value associated with the segments of the value chain for fabs.
• As per a report by the Semiconductor Industry Association (SIA), in 2022 China surpassed Taiwan in terms of share of global sales from fabs.
• The U.S. enacted the CHIPS Act in August 2022, which extends about $280 billion in subsidies and investments to encourage manufacturers to set up fabs and make semiconductors in the U.S.
• The government’s Invest India agency says that electronics manufacturing as a whole sector would be worth $300 billion by FY 25–26.
• Further, facilities for assembling finished products have been steadily increasing in number in India.
• However, the number of fabs for making chipsets and displays, which are essential parts of the manufacturing process for electronic devices in the country, is a cause of concern.
• According to the Minister of Electronics and Information Technology, the first semiconductor manufacturing fab will be announced in the coming future.

Opportunities for India

• The Semiconductor Industry Association (SIA) has said that India must rely on its strengths in the electronics manufacturing value chain.
• A significant portion of semiconductor manufacturing involves design and intellectual labour. India is said to have an advantage as a large share of semiconductor design engineers working across the world are either Indians or of Indian origin.
• Further, top chipmaking firms like Intel and NVIDIA have already established large facilities in India and have provided the required exposure to Indian talent.
• Experts feel that China is losing control over such an advantage on account of sanctions and an ageing population.

India Semiconductor Mission

• The ISM was launched in 2021 with a total financial outlay of Rs76,000 crore under the aegis of the Ministry of Electronics and IT (MeitY).
• It is part of the comprehensive program for the development of sustainable semiconductor and display ecosystem in the country.
• The programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem.
• Envisioned to be led by global experts in the Semiconductor and Display industry, ISM will serve as the nodal agency for efficient, coherent and smooth implementation of the schemes.

Components:

• Scheme for setting up of Semiconductor Fabs in India:
• It provides fiscal support to eligible applicants for setting up of Semiconductor Fabs which is aimed at attracting large investments for setting up semiconductor wafer fabrication facilities in the country.
• The Scheme extends a fiscal support of 50% of the project cost on pari-passu basis for setting up of Silicon CMOS based Semiconductor Fab in India.
• Scheme for setting up of Display Fabs in India:
• It provides fiscal support to eligible applicants for setting up of Display Fabs which is aimed at attracting large investments for setting up TFT LCD / AMOLED based display fabrication facilities in the country.
• Scheme extends fiscal support of 50% of Project Cost on pari-passu basis for setting up of Display Fabs in India.
• Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India:
• The Scheme provides a fiscal support of 30% of the Capital Expenditure to the eligible applicants for setting up of Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab and Semiconductor ATMP / OSAT(Outsourced Semiconductor Assembly and Test) facilities in India.
• Design Linked Incentive (DLI) Scheme:
• It offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.
• The scheme provides “Product Design Linked Incentive” of up to 50% of the eligible expenditure subject to a ceiling of ₹15 Crore per application and “Deployment Linked Incentive” of 6% to 4% of net sales turnover over 5 years subject to a ceiling of ₹30 Crore per application.