Detailed study of the PLI scheme 2021 for the semiconductor industry & How it could help India?

Even as they praised the package as progressive and comprehensive, the electronics and semiconductor industry has demanded more clarification on the type of sweeteners supplied under the government’s Rs 76,000 crore production linked incentive (PLI) plan.

Stakeholders also want to know if states can provide incentives to the semiconductor ecosystem in addition to the Centre’s funds, and how quickly fabs (fabrication units) will be approved.

According to Arun Mampazhy, a semiconductor fab technology expert, the devil is in the details and That’s what they’re waiting for.

He went on to say that this is a huge step forward.

At least one silicon-based semiconductor fab and one or possibly two display fabs will startup. At least one or two semiconductor fabs based on gallium nitride or silicon carbide will be built. There’s also the design element, which will pique the interest of many companies stated Mampazhy.

According to chipmakers, the nearly $10 billion packages will begin to show returns in three to five years, and approximately 30% of the 300,000 engineers graduating each year could be absorbed into this business.

However, they warned that component shortages would persist for the next 6 to 9 months.

“The battle for talent will intensify,” India Electronics and Semiconductor Association president K Krishna Moorthy warned.

Over the next three to five years, Moorthy anticipates the policy will address the country’s wafer design and product assembly difficulties.

He stated that the government is committed to investing “$30 billion” in electronics manufacturing, along with other PLI initiatives, and that India has the ability to catch up to the United States, Germany, and Singapore within the next five years.

The much-needed reprieve comes at a time when India is grappling with a component shortage that has hampered automotive, consumer electronics, and mobile manufacturers.

In the long run, challenges such as a sudden rise in semiconductor demand will be solved. This decision will also help Indian businesses compete globally for investment in core competencies and cutting-edge technologies, commented Sanjay Gupta, NXP’s India managing director.

The industry, on the other hand, is seeking clarification on a number of concerns.

They need clarity on whether the Rs 76,000 crore is solely a financial incentive, or whether it includes land subsidies, duty subsidies, and all of those incentives stated Mampazhy.

Another point of contention among parties was whether the money is only from the Centre or if states can contribute.

According to industry experts, certain states offer a 25% CAPEX exemption, while others have distinct laws.

Players like Abu Dhabi’s Next Orbit Ventures, which formed a consortium with Israeli Tower Semiconductors and issued an Expression of Interest (Eol) for a $3 billion analogue 65-nanometer semiconductor production unit in Dholera, Gujarat’s industrial heartland, have slightly different worries.

According to ET, Next Orbit Ventures’ founder and managing partner, Ajay Jalan, they merely want to make sure that EOI applicants receive approval as soon as possible. Since last year, they’ve been preparing to break ground. Because they submitted a detailed project plan to the government in response to the EOI, the approval of the incentive should not take another year.

Experts predict that because Taiwan is currently experiencing water constraint and certain plants are shutting down, global semiconductor giants will spread their footprint and supply chains.

The new incentives package aims to create a comprehensive semiconductor chip design, packaging, and manufacturing ecosystem that can attract international investment. The funding, which would be disbursed over a six-year period, is projected to attract up to Rs 1.7 lakh crore in investment.

The package, according to Qualcomm India vice president Rajen Vagadia, would promote engineering talent “through the Chips to Startups (C2S) initiative and (will give) support to design firms and startups via the Design Linked Incentive (DLI) scheme.”

Union Minister for Electronics and Information Technology Ashwini Vaishnaw told ET on Wednesday that the government would not only offer infrastructure support but also expedite clearances, with permissions expected in the next “four to six” months for a big chip production facility.

The government would fund half of the project for enterprises that are “found eligible” under the scheme, on an equal-rights basis.

“We expect demand for semiconductors continuing to rise, from electronic products to areas like automotive, healthcare, and manufacturing, with the arrival of 5G and adoption of smart technologies quickening processing at the linked edge,” said Vagadia.

Concluding words on semiconductor industry:

According to Anku Jain, managing director of MediaTek India, the initiative to incentivise semiconductor manufacturing will help India become a worldwide electronics powerhouse.

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