The Indian government is considering strategies beyond financial incentives to encourage semiconductor manufacturing in the country. A senior official from the IT Ministry mentioned that in addition to providing financial benefits for setting up semiconductor fabs, there could be encouragement for electronic product manufacturers to use domestically produced semiconductors. Import restrictions on semiconductors might also be explored once the domestic manufacturing capacity is established.
The official stated that promoting the use of Indian-made semiconductors in products manufactured within the country is a potential avenue. This could involve restricting the import of semiconductors if there are comparable, domestically produced alternatives available. The rationale behind such a move is to foster self-reliance and promote the use of locally sourced components.
Last December, the Union Cabinet approved a Rs 76,000-crore plan to incentivize companies engaged in various semiconductor-related activities. This plan includes support for silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging, and semiconductor design. The India Semiconductor Mission (ISM) is responsible for evaluating applications and proposals for the Production-Linked Incentive (PLI) scheme.
As of now, the government has received five applications for the establishment of semiconductor fabrication and display fabrication units, with a total investment commitment of $20.5 billion (Rs 1.53 lakh crore). Proposals have been submitted by entities such as Vedanta (in a joint venture with Foxconn), Singapore-based IGSS Ventures, and ISMC led by Next Orbit Ventures Fund. The evaluation process and final approvals are expected to take several years before the selected entities commence semiconductor production in India.