Cabinet expected to review semiconductor scheme applications today

The Cabinet is anticipated to scrutinise applications under the semiconductor scheme on Thursday, February 29, a move poised to potentially transform the landscape of semiconductor manufacturing in the country.

Sources revealed to CNBC-TV18 that among the notable proposals to be considered are those put forth by prominent entities such as Tower Semiconductor, Tata Group, and the Foxconn-HCL joint venture.

Tower Semiconductor has applied to the semi-conductor Production Linked Incentive (PLI) scheme to establish India's inaugural fabrication facility. The endeavour is projected to attract investments between $9 billion and $10 billion.

Meanwhile, Tata Group had also thrown its hat into the ring, presenting an application for a semiconductor chip assembly, testing, monitoring, and packing (ATMP) facility. It is speculated that the conglomerate aims to set up this facility in Assam, potentially positioning the northeastern state as a burgeoning hub for semiconductor activities.

Adding to the array of proposals is the joint venture between Foxconn and HCL, which has expressed its intent to establish an Outsourced Semiconductor Assembly and Test (OSAT) facility. The venture plans to inject approximately $100 million into the project, underscoring a concerted effort to diversify and strengthen India's semiconductor ecosystem.

This pivotal development comes in the wake of the government's announcement in 2021 of a staggering ₹76,000 crore design-linked incentive programme aimed at catalysing semiconductor production within the country.

Under the scheme, 50% of design expenditure will be borne by the government. Additionally, the government will provide a 6% incentive on incremental sales, 6% will taper over 5 years to 4%.

The scheme is envisioned as a strategic manoeuvre to reduce India's dependency on imports and propel indigenous innovation in the semiconductor domain.

Over the past two years, India has seen remarkable progress in its semiconductor industry, with the government garnering investment proposals totalling ₹2.50 lakh crore from international chip manufacturers, according to Union Minister of State for Electronics & Technology Rajeev Chandrasekhar.

At the 'Viksit Bharat Ambassador Meet' in Pune on Wednesday, Chandrasekhar said: "India is fast becoming a semiconductor nation. Just two years ago, it was not even present in the semiconductor ecosystem of the world."