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Semiconductor Production-Linked Incentive (PLI) Scheme

Posted on September 22, 2022 by admin1  1258

In News

  • Recently, the Union Cabinet approved modifications in the production-linked incentive (PLI) scheme for manufacturing of semiconductor and display manufacturing ecosystems.
    • It modified the incentives of about $10 billion that the government announced in December 2021.  

Production Linked Incentive (PLI) Scheme

  • The Finance Minister announced the Production Linked Incentive (PLI) Schemes across 13 key sectors.
    • It will create national manufacturing champions and generate employment opportunities for the country’s youth. 
  • The aim is to give companies incentives on incremental sales from products manufactured in domestic units.
  • It also invites foreign companies to set units in India along with encouraging local companies to set up or expand existing manufacturing units.

Aims and Objectives

  • To give companies incentives on incremental sales from products manufactured in domestic units.
  • To invite foreign companies to set shop in India.
  • To encourage local companies to set up or expand existing manufacturing units.
  • The goal is to make India more compliant with the World Trade Organisation (WTO) commitments and also make it non-discriminatory and neutral with respect to domestic sales and exports.

 

About the recent changes made in the scheme 

  • Fiscal support
    • The government approved uniform fiscal support of 50% of project cost for semiconductor fabs across technology nodes and display manufacturing.
    • It also raised fiscal support for compound semiconductors, packaging and other semiconductor facilities to 50% from 30%.
    • Earlier incentives for semiconductor fabs were based on the size of the node:
      • Nodes from 45 nanometre (nm) to 65 nm were offered an incentive of 30 percent of the project cost.
      • Those between 28 nm and 45 nm were offered a 40 per cent support. 
      • Only nodes from 28 nm and below were offered 50 per cent fiscal support.
  • Target technologies
    • It will include discrete semiconductor fabs.
    • Discrete semiconductors are used for devices performing basic electronic functions.

Significance of the plan

  • The modified programme will expedite investments in semiconductor and display manufacturing in India.
  • It aims for an entire integrated semiconductor ecosystem to be present in India.
    • Under the previous terms of the scheme, there was a potential risk that we would have established fabs in the country but the packaging would have happened elsewhere. 
  • Self-Sufficient: The government had announced the massive incentive plan to establish chip and display industries in India with the intent of becoming an electronics manufacturing hub and cut reliance on supplies from China.
  • Semiconductor market: The technology nodes of 45nm and above have high demand which is driven by automotive, power and telecom applications, which constitute around 50% of the total semiconductor market.

Way forward

  • The incentives are planned to be offered to companies over six years and expected to attract investments worth 1.77 trillion.
  • It has since seen a $20 billion investment from Vedanta-Foxconn joint venture for setting up a semiconductor fab unit, display unit and other projects in Gujarat.
  • Israel-based ISMC Analog Fab Private Limited will set up a semiconductor fab unit with an investment of $3 billion. 

India Semiconductor Mission (ISM)

  • It is a specialized and independent Business Division within the Digital India Corporation that aims to build a vibrant semiconductor and display ecosystem to enable India’s emergence as a global hub for electronics manufacturing and design.
  • The mission aims to serve as a focal point for the comprehensive, coherent, efficient, and smooth deployment of the Program for Development of Semiconductor and Display Ecosystem.
  • ISM has been proposed with the objective to:
    • Facilitate the adoption of secure microelectronics and developing a trusted semiconductor supply chain, including raw materials, specialty chemicals, gases, and manufacturing equipment.
    • Enable a multi-fold growth of the Indian semiconductor design industry by providing requisite support in the form of Electronic Design Automation (EDA) tools, foundry services and other suitable mechanisms for early-stage startups.
    • Promote and facilitate indigenous Intellectual Property (IP) generation.
    • Encourage, enable and incentivize Transfer of Technologies (ToT).
    • Establish suitable mechanisms to harness economies of scale in the Indian semiconductor and display industry.
    • Enable cutting-edge research in semiconductors and display industry including evolutionary and revolutionary technologies through grants, global collaborations and other mechanisms in academia/research institutions, industry, and through establishing Centres of Excellence (CoEs).
    • Enable collaborations and partnership programs with national and international agencies, industries and institutions for catalyzing collaborative research, commercialization and skill development.

Source: IE

 
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