The Semicon 2.0 scheme has the potential to catalyse over Rs 5 lakh crore cumulative private and industry investment in the semiconductor ecosystem over the next five years, industry body IESA said.
Ministry of Electronics and IT notified the Rs 1.27 lakh crore scheme on Monday. It was approved by the Union Cabinet last month.
“Based on the current investment pipeline and the much broader scope of Semicon 2.0, IESA sees the potential for the programme to catalyse more than Rs 5 lakh crore of cumulative private and industry investment over the next five to seven years, across fabs, ATMP/OSAT, equipment and materials, design, research & development and the wider supply chain,” the India Electronics and Semiconductor Association (IESA) and Semi India President said.
He said that 5-7 chip manufacturing units (wafer fabs) are expected to be set up in the country in the next five to seven years.
The scheme offers 25-40 per cent capex support for chip manufacturing and assembly plants for investments of Rs 50 crore to Rs 20,000 crore. It provides the highest incentive of up to 75 per cent of project cost for research and development of advanced semiconductor technologies and similar incentive for semiconductor talent development.
The scheme will support production of display technologies including OLED, micro-LED technology, LCD etc.
The government has announced a plan to focus on indigenous development of advanced small size chips in the range of 3-7 nanometer (nm), which are used in high-end technology products, under the program.
Chandak said research and development focus on 3-7 nm pathway, silicon photonics, micro LEDs, compound semiconductors and support to OCI (overseas citizens of India) and large corporates in fabless sector and manufacturing related skilling are notable differentiations.
He said that the government’s financial support should be seen as a catalyst rather than the total investment.
“Every semiconductor project creates a multiplier effect around it-generating demand for equipment, materials, chemicals, precision engineering, packaging, testing, logistics and talent. When this is combined with ECMS (electronics component manufacturing scheme), MPMS (mobile phone manufacturing scheme) and EMC, the multiplier can become significantly larger,” he said.
Mobile phone makers body ICEA said the scheme is designed to attract investments of around Rs 4 lakh crore and enable semiconductor production of about Rs 2 lakh crore over the scheme period, while building depth across design, manufacturing, supply chains and talent.
“We believe that Semicon 2.0 must now be read as a destination, not only a scheme. India should aim to nurture 100 fabless companies in this phase and over the longer horizon, build a base of around 500 semiconductor design firms that own their IP. The prize is not another assembly line but USD 50 billion of indigenously designed semiconductor product value, a million high-quality jobs, and the capability to design and source chips for the bulk of India’s own strategic and commercial demand,” ICEA Chairman, Pankaj Mohindroo said.
GX Group, which is planning to set up capabilities in photonics packaging and photonic chip design, said the scheme’s focus on advanced packaging, chip design, displays and other critical semiconductor technologies will strengthen domestic capabilities across the value chain.
“We, at GX Group, believe that this would create significant opportunities to deepen technology partnerships, build indigenous capabilities and integrate into emerging semiconductor supply chains,” GX Group CEO, Paritosh Prajapati said.
EY India partner and semiconductor tax leader, Aisha Ali Hussaini said the program targets support across key segments through seed funding, co-investment, royalty-linked financing, production-linked incentives.
“Aligned with India’s ambition to capture 10 per cent of the projected USD 1.8-2 trillion global semiconductor market by 2035, the programme provides a robust foundation for long-term economic growth by strengthening the domestic semiconductor value chain,” Hussaini said.
