Budget allocation for semiconductor and display manufacturing jumps 130% to Rs 6,903 crore

Budget allocation for Semiconductor: The revised estimate of expenditure for the ‘Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India’ in FY24 is Rs 1,503 crore

In the interim Budget, the government has increased the allocation for a scheme to support semiconductor and display manufacturing by 130 percent to Rs 6,903 crore, although it is expects to fall behind last year’s projection of Rs 3,000 crore in the current financial year.

The revised estimate of expenditure for the ‘Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India’ in FY24 is Rs 1,503 crore, showed budget documents.

Under the programme, fiscal incentive of 50 percent of the project cost is available to companies/consortia/ joint ventures for setting up of semiconductor fabs in India of any node size (including mature nodes). Similarly, a fiscal incentive of 50 percent of the project cost is available for setting up of display fabs of specified technologies in India.

The application window for the scheme is open till December 2024. Application window of Design Linked Incentive Scheme is also open till December 2024. Till date 26 applications have been received under DLI Scheme and five applications have been granted approval.

The government had launched the Semicon India Programme in December 2021 with an outlay of Rs 76,000 crore for the development of semiconductors and display manufacturing ecosystem in India.

To be sure, the government’s spending under the scheme is expected to rise this year as certain payouts may be made for the Rs 22,516 crore semiconductor packaging plant being set up by Micron in Gujarat.

Ground breaking of the unit at Sanand, Gujarat was done in September 2023. Construction of the unit is going on in full swing and is expected to be completed in about 12 months. The memory and storage products manufactured in this unit will cater to domestic consumption and be exported globally.

The unit is expected to create up to 5,000 direct and 15,000 indirect job opportunities over the next 5 years. India Semiconductor Mission, Government of Gujarat and Micron are working collaboratively in close association with academia to train about 10 thousand engineers.

More than 30 gasses, chemicals, equipment, substrate manufacturing and other ancillary industries are in various phases of discussion for setting up facilities in Gujarat.

Agreements for ensuring project milestones are met timely and for disbursement of incentives were signed today among Micron, India Semiconductor Mission and Government of Gujarat.

“An increase of more than 200% increase in semiconductor & display manufacturing from Rs 3,000 crore to Rs 6,903 crore is the indication of things to come towards making India a rising Semiconductor Product Nation. The year 2024 will be a break-out year for this sector with one large OSAT project by Micron already approved and more than are under evaluation,” says Satya Gupta, president, VLSI society. 

Following the budget allocation, Ashok Chandak, IESA President stated, “Out of Rs 6,903 crores, a significant chunk of Rs 4,203 crore has been earmarked for incentives for ATMP. This is expected to benefit announced and new projects by companies like Micron, Foxconn-HCL joint venture, and Tata Group, etc and invite renewed interest in ATMP sector. Rs 1,500 crores is designated for semiconductor fab or electronic chip plants that will spur the compound semiconductors and sensors manufacturing, Rs 900 crore support for the Mohali-based semiconductor laboratory, and Rs 200 crore for the design-linked incentive scheme to add to design and IPR development in India.”

Currently, over 12 large projects are under discussion between investors and government as per information available in public domain. These includes Tata Electronics (Semiconductor Fab & OSAT), Tower Semiconductor (Semiconductor Fab), Silicon Power (Compound Semiconductor Fab), SICSEM (Compound Semiconductor Fab)

CG Power (Compound Semiconductor Fab & OSAT), Tarq Semiconductors (Compound Semiconductor Fab & OSAT),Kaynes Technology (OSAT), HCL-Foxconn (OSAT) and Vedanta Display fab. However, the government has made Production Grade Technology a must requisite for approving any of these projects.

“It is expected that the government evaluation of these projects will be completed in the next few months and the total investment may reach about $10 Billion including existing projects. This may require a total outlay of about 10,000 Crores for the financial year 2024-25. The increased amount for the outlay from the existing 6,900 Crores allocated can be planned in the full budget after the approval status is known in the next couple of months,” adds Gupta.

Hitesh Garg, Vice President, and India Managing Director, NXP Semiconductors believes the Budget 2024 is giving a strong push to the semiconductor and electronics manufacturing sector in India. He says, “the semiconductor industry is at the heart of innovation, and the rise to Rs 6,903 crore in the budgetary allocation for its development, including support for capex and research, is an important step. I believe that these strategic moves will not only accelerate the growth of the semiconductor industry but also elevate India’s position as a preferred destination for the electronics system design and semiconductors.”

While Garg is excited about these opportunities and look forward to collaborating with stakeholders in the industry, NXP Semiconductors hasn’t revealed any plans for setting up a fab or ATMP in India yet.

However, the industry is upbeat that the budget 2024-25 is surely a strong step in the direction of making India a rising Electronics and Semiconductor Product Nation.

With Thanks Reference to: https://www.moneycontrol.com/news/business/budget/budget-allocation-for-semiconductor-and-display-manufacturing-jumps-130-to-rs-6903-crore-12172611.html and https://www.businesstoday.in/technology/news/story/budget-2024-rs-6903-cr-allocation-for-semiconductor-scheme-could-mean-more-plans-in-pipeline-416076-2024-02-03