In hopes of strengthening its electronics supply chain and smartphone assembly industry, Indian government is offering more than $1 billion in cash to each semiconductor company that sets up manufacturing units in the country.
Government’s Interest In Chip Fabrication Units
So far, the Modi government’s ‘Make in India’ initiative has helped to turn India into the world’s second-biggest mobile manufacturer after China.
But now, the Center believes that it is time for chip companies to set up in the country.
According to the senior officials, “the government will give cash incentives of more than $1 billion to each company which will set up chip fabrication units,”.
Further adding, “We’re assuring them that the government will be a buyer and there will also be mandates in the private market (for companies to buy locally made chips).”
Although the disbursement of the cash incentives is yet to be decided, but, the center has asked the industry for feedback.
How Does This Help?
Currently, around the world, all Governments are subsidising the construction of semiconductor plants.
Citing the importance as the chip shortages hobble the auto and electronics industries and highlight the world’s dependence on Taiwan for supplies.
Not to be left behind, Indian government also wants to establish reliable suppliers for its electronics and telecom industry.
This will further remove the dependence on China following border skirmishes last year.
Not only that, the locally designed Chips will be designated as “trusted sources”.
They can also be used in products ranging from CCTV cameras to 5G equipment, according to the sources.
Hope For The Future
So far, there is no confirmation about any particular semiconductor companies for showing interest in setting up units in India, in response to the government’s initiative.
This is not the first time that the government has tried to woo semiconductor players.
In their previous attempts, the semiconductor firms were deterred by the country’s wobbly infrastructure, unstable power supply, bureaucracy and poor planning.
The latest attempt is more likely to succeed, considering the success of the smartphone industry, according to the sources.
During December, the government has invited an “expression of interest” from chipmakers for setting up fabrication units in the country.
It was also for the acquisition of such manufacturing units overseas by an Indian company or consortium.
If it happens then it will need 2-3 years after all the approvals in place with a cost roughly $5-$7 billion to set up a chip fabrication unit in India, as per the government’s estimates.
The Center is also willing to offer concessions to the companies, including waivers on customs duty, research and development expenses and interest free loans.