Lok Sabha Question No. 5156 (UNSTARRED), answered on 2017-04-05
Subject: Manufacturing of Semi Conductor Units
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: K. KAMARAAJ

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO.5156

TO BE ANSWERED ON 05.04.2017

## MANUFACTURING  OF SEMI CONDUCTOR UNITS

## 5156.     DR. K. KAMARAJ:

Will the Minister of Electronics and Information Technology be pleased to state:

- (a) the present status of semi-conductor industry in the country and the growth expected in the next three years;
- (b) whether the demand of the industry is mainly being met through import;
- (c) if so, the details thereof; and
- (d) the action taken by the Government to bridge the gap between import and indigenous manufacturing of semi-conductors?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI P.P. CHAUDHARY)

(a), (b) and (c): Semiconductor manufacturing capability in India is at a nascent stage and is limited  to  manufacturing  of  discrete  devices  only.  India  has  semiconductor  fabrication facilities  at  lab  scale  and  does  not  have  any  commercial  semiconductor  wafer  fabrication facility.  As  per  Electronic  Industries  Association  of  India  (ELCINA),  the  consumption  of semiconductors  in  India  is  estimated  to  increase  from  approx.  USD  10  Billion  in  2013  to approx.  USD  52.58  Billion  by  2020,  at  a  Compound  Annual  Growth  Rate  (CAGR)  of 26.72%.  Presently,  the  demand  is  primarily  met  by  imports.  However,  India  is  well positioned in the Semiconductor Design segment. As per India Electronics and Semiconductor Association (IESA), around 200 semiconductor companies including the top 10 global fabless companies have their semiconductor design operations in India and employ around 2,50,000 professionals.

(d):  Promotion of electronics  hardware manufacturing is one of the pillars of Digital  India programme  of  the  Government.  List  of  steps  taken  to  promote  electronics  hardware manufacturing  ecosystem  in  the  country,  including  setting  up  of  semiconductor  wafer fabrication facilities, is enclosed at Annexure .

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## Steps taken by the Government to promote electronics manufacturing in the country

1. Promotion  of  electronics  hardware  manufacturing  is  one  of  the  pillars  of  Digital  India  campaign  of  the Government.
2. The National Policy on Electronics (NPE 2012) was notified in October 2012 with the vision to create a globally competitive electronics design and manufacturing industry to meet the country's needs and serve the international market.
3. Modified Special Incentive Package Scheme (M-SIPS) provides financial incentives to offset disability and attract investments in the Electronics Systems Design and Manufacturing (ESDM) sector. The scheme was notified in July 2012. The scheme provides subsidy for investments in capital expenditure - 20% for investments in SEZs and 25% in non-SEZs. The scheme is available for both new projects and expansion projects. For high technology and high capital investment units like Fabs, production subsidy @10% is also provided.
4. Electronics  Manufacturing  Clusters  (EMC)  Scheme  provides  financial  assistance  for  creating  world-class infrastructure  for  electronics  manufacturing  units.  The  assistance  for  the  projects  for  setting  up  of  Greenfield Electronics Manufacturing Clusters is 50% of the project cost subject to a ceiling of Rs.50 Crore for 100 acres of land. For larger areas, pro-rata ceiling applies. For lower extent, the extent of support would be decided by the Steering  Committee  for  Clusters  (SCC)  subject  to  the  ceiling  of  Rs.50  Crore.  For  setting  up  of  Brownfield Electronics  Manufacturing  Cluster,  75%  of  the  cost  of  infrastructure,  subject  to  a  ceiling  of  Rs.50  Crore  is provided.
5. An Empowered Committee has been constituted by Government of  India for setting  up  Semiconductor Wafer Fabrication (FAB) facilities in the country.
6. Policy for providing preference to domestically manufactured electronic products in Government procurement is under implementation.
7. Approvals for all foreign direct investment up-to 100% in the electronic hardware manufacturing sector are under the automatic route.
8. For promotion of exports in the sector, Merchandise Exports from India Scheme (MEIS) and Export Promotion Capital  Goods  (EPCG)  Scheme  are  available  under  the  Foreign  Trade  Policy,  2015-20.  MEIS  offers  export incentives so as to offset disabilities of manufacturing. The export incentive for electronic goods is available  @ 2% of FOB value of export. Zero duty EPCG scheme allows import of capital goods at zero customs duty, subject to specified export obligation.
9. Under the Electronics Hardware Technology Park (EHTP) Scheme, approved units are allowed duty free import of goods required by them for carrying on export activities, CST reimbursement and excise duty exemption on procurement of indigenously available goods, as per the Foreign Trade Policy.
10. Tariff Structure has been rationalized to promote indigenous manufacturing of electronic goods, including interalia Televisions, Electronic Components, Set Top Boxes, LED Products, Medical Electronics, Solar PV Cells and Microwave Ovens.
11. To promote indigenous manufacturing of Televisions, baggage rules have been amended to ban duty free import of Flat Panel Television Sets w.e.f. August 2014 under the baggage allowance.
12. Mandatory compliance to safety standards has been notified for identified Electronic Products with the objective to  curb  import  of  sub-standard  and  unsafe  electronics  goods.  As  of  now,  30  electronic  products  are  under  the ambit of this Order.

## Skill Development

13. Two Schemes for skill development of 90,000 and 3,28,000 persons, respectively  in the electronics sector has been approved to provide human resource for the industry.
14. The Scheme to enhance the number of PhDs in the Electronic System Design and Manufacturing (ESDM) and IT/IT  Enabled  Services  (ITES)  sectors  has  been  approved.  3000 PhDs  are  proposed  to  be  supported  under  the Scheme.

## Promotion of Innovation and R&D

15. Electronic Development Fund (EDF) policy has been operationalized to support Daughter Funds in the area of Electronics System Design and Manufacturing, Nano-electronics and IT. The fund is housed in Canbank Venture Capital Fund Ltd. The supported Daughter Funds will promote innovation, R&D, product development and within the country.
16. A fabless chip design incubator centre is being set up at IIT Hyderabad to incubate start-ups in semiconductor design. This Incubator will incubate 50 start-ups over a period of 5 years.
17. National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) has been set up in IIT-Kanpur with the  objectives  to  promote  R&D;  Manufacturing;  Ecosystems;  Entrepreneurship;  International  Partnerships  and Human Resources and develop prototypes in collaboration with industry for commercialization.
18. National Centre of Excellence for Technology on Internal Security (NCETIS) has been set up at IIT-Bombay with the  objective  to  address  the  internal  security  needs  of  the  nation  on  continuous  basis  by  delivering  technology prototypes required for internal security and to promote domestic industry in internal security.
19. Centre for Excellence on Internet of Things (IoT) has been set up in Bengaluru jointly with NASSCOM.
20. The  Ministry  of  Electronics  and  Information  Technology  (MeitY)  provides  funding  under  several  schemes  for promotion of R&D, including support for International Patents in Electronics & IT (SIP-EIT); Multiplier Grants Scheme  and  Scheme  for  Technology  Incubation  and  Development  of  Entrepreneurs  (TIDE)  in  the  area  of Electronics, ICT and Management.

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