The Government of India has allocated a major budget increase of 130% for the ‘Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India.’ The revised estimate for the economic year 2024 stands at Rs 6,903 crore, reflecting a proactive approach to support an important sector.
India has emerged as one of outstanding players in the semiconductor and display manufacturing industry, supporting its skilled workforce and technological capabilities. The country has witnessed a growing interest from global semiconductor companies establishing fabs and manufacturing facilities, contributing to the development of a strong semiconductor ecosystem. In addition, India has made progress in display manufacturing, with several companies investing in advanced technologies to produce high-quality screens for various electronic devices.
The revised expenditure for the modified program in FY24 is projected to be Rs 1,503 crore, as per official budget documents. This considerable increase demonstrates the government’s commitment to support the growth of the semiconductor and display manufacturing industry within the country. Under the program, companies, institutes and joint ventures receive a fiscal incentive of 50% of the project cost for establishing semiconductor fabs in India, having nodes of any size, including mature nodes. Similarly, a 50% fiscal incentive is available for setting up display fabs with specified technologies within the country.
The application window for the scheme remains open until December 2024, providing sufficient opportunity for interested parties to participate. Simultaneously, the Design Linked Incentive Scheme, another angle of the initiative, also has its application window open until December 2024. So far, 26 applications have been received under the Design Linked Incentive Scheme, with five receiving approval. The government initiated the Semicon India Programme in December 2021, reserving a solid Rs 76,000 crore for developing the semiconductor and display manufacturing ecosystem. This combined effort is set to boost India’s standing in the global semiconductor market.
With increased expenditure this year, the government is gearing up for potential payouts related to Micron’s Rs 22,516 crore semiconductor packaging plant in Gujarat. The ceremony for the plant in Sanand, Gujarat, took place in September 2023, and construction is progressing smoothly, with completion expected within the next 12 months. The Micron facility is set to play an important role in meeting domestic demand while contributing to global exports. Additionally, the plant is anticipated to generate employment opportunities, with up to 5,000 direct and 15,000 indirect jobs expected over the next five years.
Collaborative efforts between Micron, the India Semiconductor Mission, and the Government of Gujarat are underway. The triple agreements signed recently stresses the commitment to ensuring timely project milestones and facilitating the payments of incentives. Furthermore, the collaboration extends to academia, with plans to train approximately 10,000 engineers in partnership with educational institutions.
The impact of these developments extends beyond the Micron project, as more than 30 industries involved in gases, chemicals, equipment, substrate manufacturing, and ancillary services are in discussions to establish facilities in Gujarat. These initiatives represent a significant step towards establishing India as a hub for semiconductor and display manufacturing, boosting economic growth and job creation.
