Government Approves 50 percent Financial Incentive For Semiconductor And Display Fabs

Last Updated on September 22, 2022 by Anu Joy

Semiconductor companies setting up fabs in India will now receive 50 percent financial incentives across technology nodes as well as for compound semiconductors, packaging, and other chip facilities. The proposal was approved by the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday. 

Under the modified “Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India,” the government will provide a uniform 50 percent incentive regardless of technology nodes for setting up semiconductor fabs in India. Furthermore, the programme will now provide fiscal support of 50 percent of capital expenditure in pari-passu basis for setting up compound semiconductors / silicon photonics / sensors / discrete semiconductor fabs and ATMP/OSAT, according to a PIB release. 

The government hopes the modified programme will accelerate investments in semiconductor and display manufacturing in India. Potential investors told ANI that the expected work on setting up of the first semiconductor facility will commence soon. 

The government has also set up an advisory committee comprising global experts from industry and academia to assist in this mission. Called the India Semiconductor Mission, the nodal agency is responsible for framing policies and advising the government on the best practices to follow. The advisory committee unanimously recommended extending uniform support for all technology nodes, which has been accepted by the government. 

The government is looking to set up facilities of 45nm technology nodes, which have high demand in the automotive sector, power and telecom. The segment also consists of 50 percent of the total semiconductor market, according to a statement by the Ministry of Electronics and IT.