How PLI for Semiconductor Industry will Boost its Growth

The Central government is looking at at least 2 greenfield semiconductor fabs & 2 display fabs in India, while at least fifteen units of Compound Semiconductors along with Semiconductor Packaging are anticipated to be established under this scheme with government support.

"The scheme will include provision for 25 per cent incentives on capital expenditure for establishing unit of Compound Semiconductor Wafer Fabrication (Fab), assembly, testing, and packaging facility," stated a report from CNBC Awaaz.

The fight for talent will increase

The electronics & semiconductor industry has sought clarity on the nature of sweeteners being given under the PLI scheme by the government for the sector, even as they hailed the package as being both progressive as well as comprehensive. Furthermore, Stakeholders also want to know if states could provide incentives to the semiconductor ecosystem which is over & above the Center’s grants. And, how fast approvals will be given for fabrication units to be set up.

"At least one silicon-based semiconductor fab and one display fab will take off or possibly two. And at least one or two gallium nitride or silicon carbide semiconductor fabs will also happen. There's also the design aspect which a lot of companies will be interested in," said Arun Mampazhy, an expert on semiconductor fab technology.

Chipmakers stated that the nearly USD 10 billion packages will begin displaying results only in about 3-5 years and around thirty percent of the three lakh engineers graduating every year could get absorbed in this industry. However, the chip manufacturers also cautioned that component shortages will continue to invade the industry over the next six to nine months.

"The fight for talent will increase," said K Krishna Moorthy, president of India Electronics and Semiconductor Association.

Addressing the challenges of wafer design & product assembly

He expects the policy to address the challenges that include wafer design, and product assembly in India over the coming 3-5 years. Moorthy also stated that along with other Production-Linked Incentive schemes in electronics manufacturing, the government of the country is committed to USD 30 billion and within the next 5 years, the country had the potential to be on par with countries such as Germany, Singapore, and the US.

The much-needed relief for the semiconductor industry is arriving at a time when the country has been facing a shortage of components which has handicapped consumer electronics, automakers as well as handset manufacturers.

"In the long term, issues like a sudden surge in demand for 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," said Sanjay Gupta, India managing director of semiconductor maker NXP. “The industry is, however, seeking clarifications over a host of issues”.

Conclusion

The new incentive package is aimed at creating an ecosystem that is comprehensive for semiconductor chip design, manufacturing, and packaging which has the potential to attract global investment, while the funding that will be offered during the period of 6 years is anticipated to bring an investment of up to Rs 1.7 lakh crore.