India to offer more incentives for localised chip, display manufacturing

The Centre on Wednesday raised financ ial support for new semiconductor facilities to cover 50 percent of project costs and said it will remove a ceiling for maximum permitted investment for display manufacturing as it moves to boost local production.

The announcement comes as the government seeks to attract more big-ticket investments under a $10 billion incentive plan for chip and display production, aiming to make India a key player in the global supply chain.

"On the basis of discussion with potential investors, it is expected that work on setting up the first semiconductor facility will commence soon," a government statement from Wednesday said.

The government had previously agreed to cover between 30 percent and 50 percent of the cost of setting up new display and chip plants. It said on Wednesday that it will also cover 50 percent of the capital expenditure required to set up semiconductor packaging facilities.

Last week oil-to-metals conglomerate Vedanta and Taiwan's Foxconn signed a pact with the Gujarat government to invest $19.5 billion in the state to set up semiconductor and display production plants.

Vedanta is the third company to announce a chip plant location in India after international consortium ISMC and Singapore-based IGSS Ventures, which are setting up in Karnataka and Tamil Nadu respectively.

Last month, a joint study by the Indian Electronics and Semiconductor Association (IESA) and Counterpoint Research claimed that India's semiconductor market, pegged at $119 billion in 2021, will grow at a compounded annual rate of 19 percent to $300 billion by 2026.