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‘Centre May Launch Rs 10,000 Crore Incentive Scheme to Boost Semiconductor Manufacturing’

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Source: ET Report

According to a recent report in the Economic Times, the Indian government is reportedly preparing to launch a new incentive scheme worth up to Rs 10,000 crore (approximately $1.3 billion USD) aimed at promoting the establishment of electronic and semiconductor component manufacturing plants within the country. The initiative seeks to create a supportive ecosystem for large-scale chip packaging units established by companies such as US-based Micron, as well as Indian conglomerates Tata Group and Kaynes Corp. This endeavor marks the initial phase of India’s ambitious goal to become a global hub for electronics manufacturing and design.

The upcoming incentive plan, expected to be introduced at the start of the next fiscal year, will serve as an updated version of the current “Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors” (SPECS). Unlike the existing reimbursement method, the new scheme may be structured to provide funds on a ‘pari-passu’ (equal footing) basis.

In addition to the assembly, testing, marking, and packaging (ATMP) plants announced by companies like Micron, Tata Electronics, and Kaynes Corp, other players like the HCL Group and Tamil Nadu-based Murugappa Group are also finalizing their plans to enter the semiconductor manufacturing sector. These ancillary units will encompass those supplying raw materials, including specialty chemicals and gases required in the semiconductor chip fabrication, assembly, testing, and packaging processes.

Following the approval for Micron to set up an ATMP unit in Gujarat’s Sanand, various companies supplying specialized chemicals, gases, integrated circuit packaging substrates, purified air, and related equipment are seeking to establish allied units in proximity to the Micron facility to support its operations. As new chip fabrication units emerge, similar ancillary units will need to be established to complement their functions.

The current SPECS scheme provides reimbursement of up to 25% of the total capital expenditure on a project after its completion. With the existing SPECS fund almost depleted, the government is considering significantly increasing the fund size, potentially doubling or tripling the current allocation to support the semiconductor manufacturing industry’s growth.

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