Semiconductor Production Receives Union Government Boost In India

The Union government has announced incentives of Rs 76,000 crore for the local development and production of semiconductors in India. A global shortage of semiconductors has gripped automotive manufacturing in several countries. In India, this shortage has affected all carmakers, and delayed deliveries of newly launched vehicles such as the Mahindra XUV700. 

An ‘India Semiconductor Mission’ is in the plans – an independent body led by industry experts that will “act as a nodal agency for implementation of the schemes”. Alongside semiconductors, the development of display systems is also a part of the mission. 

The Scheme intends to cover 50 percent of the project cost for eligible companies that have the capacity to set up semiconductor fabrication in India. For now, at least two all-new semiconductor fabrication and two display fabrication facilities are to be set up in the country. In addition, at least fifteen facilities for compound semiconductor production (such as chips and sensors) are in the plans, which will be in place for the next five years.

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India expects to expand into different sectors in the electronics industry, and locally develop IT hardware, solar cells, car components, advanced chemistry (ACC) batteries, and large appliances (such as fridges and washing machines). By 2025, the government projects a USD 1 trillion economy for these components and appliances. It's too early to tell if it'll reduce prices of internal combustion and electric cars in India, but it could serve as a boost for Indian tech companies and startups.