Semiconductor Incentive Scheme: Govt Will Cover 50% Cost For New Factories; Rs 2 Lakh Cr Investment Expected

junior IT minister Rajeev Chandrasekhar said that because of its incentive scheme meant to boost local manufacturing of chip and display panels, India is expecting to court a total investment of at least $25 billion. 

Fiscal Support to Cover 50% Project Costs

Just before few hours the Indian government had raised fiscal support for new semiconductor facilities to cover 50% of project costs. Also, the government said that the ceiling for maximum permitted investment shall be removed to enable incentives for display manufacturing.

With the aim of putting India in the global map of key player in the global supply chain, the Modi government is seeking to attract more big-ticket investments under a $10 billion incentive plan for chip and display production.

Previously, the government announced that it will cover between 30% and 50% of the cost of setting up new display and chip plants. Later the government also confirmed that it will also cover 50% of the capital expenditure required to set up semiconductor packaging facilities.

The IT minister said that not just that but also the government is in contact with other players for investments in India’s chip sector. However, he did not name any player.

He said that “These conversations are happening in the context of multiple incentive packages and programs that have been announced by various countries”.

He added that “Our proposition is … we have a proven track record of growing the electronics industry. And we also come along with the basic infrastructure requirement to set up manufacturing”.

Investments Made Till Now By Various Players

Previously the oil-to-metals conglomerate Vedanta and Taiwan’s Foxconn (2317.TW) were in the news in this segment as they signed a pact with India’s Gujarat to invest $19.5 billion in the western state to set up semiconductor and display production plants.

Previously there was announcement by international consortium ISMC and Singapore-based IGSS Ventures about setting up plants in southern states Karnataka and Tamil Nadu respectively. This makes Vedanta, the third company to announce a chip plant location in India.