India Mulls Incentives for Semiconductor Ancillary Firms to Address Disability

The Indian government is exploring the possibility of introducing a scheme to incentivise semiconductor ancillary firms. This move aims to address the disability in the semiconductor segment and facilitate the establishment of supply chain players in India. The Minister of State for Communications and IT, Rajeev Chandrasekhar, made this announcement during the groundbreaking ceremony of three chip plants with investments worth Rs 1.26 lakh crore.

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Addressing Disability in the Semiconductor Industry

Chandrasekhar acknowledged the disability issue in the semiconductor industry and indicated that the government may introduce a scheme when seeking the second round of investments for the semiconductor ecosystem. In response to a question about the investment status of Micron's ancillary companies, the minister revealed that several companies have requested incentives not covered by the current semiconductor policy. He suggested that an additional policy similar to SPECS (Scheme for the Promotion of Manufacturing of Electronic Components and Semiconductors) may be required to support these companies, especially if there is justification for covering disability for moving to India.

Encouraging Local Production of Electronic Components

The government has already implemented SPECS to promote local production of electronic components, including semiconductors. Chandrasekhar emphasised that the semiconductor industry is highly complex, and chip makers in India are hesitant to disrupt their existing supply chains. Initially, a native supply chain will be established, but over time, most companies are expected to set up subsidiaries in India.

India's Growing Semiconductor Production Capacity

With the proposed chip plant of Tower Semiconductors and the modernisation plan of SCL Mohali, India is poised to develop the capacity to produce 1.8 lakh wafers per month. Additionally, Tata Electronics' wafer fabrication plant will have the capability to produce 50,000 wafers per month. These wafers are large disc-shaped plates that are cut into pieces for electronic chips.

The government's consideration of incentives for semiconductor ancillary firms is a positive step towards addressing the disability in the segment and attracting supply chain players to India. By encouraging local production and developing the necessary infrastructure, India aims to become a significant player in the global semiconductor industry.