In a move to position India as a global hub for electronics manufacturing with semiconductors, the Union Cabinet on Wednesday approved incentive schemes to the tune of Rs 2,30,000 crore for the development of semiconductors and its ancillary industry in India.

The decision was taken in the Union Cabinet chaired by Prime Minister Narendra Modi to give a series of attractive incentives to the Semiconductor industry. The objective of the Semiconductor industry is to usher in a new era in the electronics manufacturing industry by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design, said a senior officer of the Ministry of Electronics and IT.

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It would pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance, he said. Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0. Since its manufacturing is very complex and technology-intensive, it involves huge capital investments, high risk, long gestation, and payback periods.

Further, the rapid changes in technology require significant and sustained investments, the Ministry said while elaborating the incentive support given to companies engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors, Silicon Photonics, Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT), and Semiconductor Design, the officer said.

For comprehensive financial support for the semiconductor sector, an outlay of Rs.76,000 crore (more than 10 billion USD) has been approved by the Union Cabinet. “Government has given incentives for every part of the supply chain including electronic components, sub-assemblies, and finished goods.

Besides incentive support to the tune of Rs.55,392 crore (7.5 billion USD) have been approved under PLI for Larges Scale Electronics Manufacturing, PLI for IT Hardware, SPECS Scheme, and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme, the Ministry said.

In addition to this, PLI incentives to the quantum of Rs.98,000 crore (USD 13 billion) have also been approved for allied sectors comprising ACC battery, auto components, telecom, and networking products, solar PV modules, and white goods, the officer said.

“In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure. The approved program will propel innovation and build domestic capacities to ensure the digital sovereignty of India. It will also create highly skilled employment opportunities to harness the demographic dividend of the country,” the Ministry stated.

Development of the semiconductor and display ecosystem would also have a multiplier effect across different sectors of the economy with deeper integration to the global value chain. The program will promote higher domestic value addition in electronics manufacturing and will contribute significantly to achieving a USD 1 Trillion digital economy and a USD 5 Trillion GDP by 2025, the Ministry said.