Lok Sabha Question No. 74 (UNSTARRED), answered on 2022-02-02
Subject: Chip Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Girish Bhalchandra Bapat, Chandra Sekhar Sahu, Rahul Ramesh Shewale, Pritam Gopinath Munde

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 74

TO BE ANSWERED ON: 02.02.2022

## CHIP MANUFACTURING

## 74. SHRI GIRISH BHALCHANDRA BAPAT: SHRI CHANDRA SEKHAR SAHU: SHRI RAHUL RAMESH SHEWALE: DR. PRITAM GOPINATHRAO MUNDE:

Will  the  Minister  of  ELECTRONICS  AND  INFORMATION  TECHNOLOGY  be  pleased  to state:

- (a)  whether  the  Union  Government  is  planning  to  develop  an  entire  ecosystem  for  the  chip manufacturing industry;
- (b) if so, the details thereof;
- (c) whether the Union Government proposes to give incentive for setting up local factories; and if so, the details thereof;
- (d) the details of the response received by the Union Government in this regard;
- (e) whether the Union Government approved any scheme to boost the semiconductor and display manufacturing in the country;  and if so, the details thereof; and
- (f) the details of the other steps taken by the Union Government to make the country self-reliant in electronics manufacturing?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI RAJEEV CHANDRASEKHAR)

(a) and (b): Yes, Sir. The government is very focussed on its important objective of building the overall semiconductor ecosystem and ensure that, it in-turn catalyses India's rapidly expanding electronics manufacturing and innovation ecosystem. This vision of AtmaNirbharta in electronics & semiconductors was given further momentum by the Union Cabinet chaired by the Hon'ble  Prime  Minister  approving  the  Semicon  India  programme  with  a  total  outlay  of  INR 76,000 crore for the development of semiconductor and display manufacturing ecosystem in our country. The programme  aims  to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem. This will serve to pave the way for India's growing presence in the global electronics value chains.

(c)  and  (e):  Yes,  Sir.  As  part  of  Semicon  India  Programme,  Union  Government  has  approved following schemes to provide incentives for setting up of semiconductor and display fabs in the country:

- i. Scheme  for  setting  up  of  Semiconductor  Fabs  in  India provides  fiscal  support  to eligible applicants for setting up of Semiconductor Fabs which is aimed at attracting large investments  for  setting  up  semiconductor  wafer  fabrication  facilities  in  the  country. Following fiscal support has been approved under the scheme:
2.  28nm or Lower - Up to 50% of the Project Cost
3.  Above 28 nm to 45nm - Up to 40% of the Project Cost
4.  Above 45 nm to 65nm - Up to 30% of the Project Cost
- ii. Scheme  for  setting  up  of  Display  Fabs  in  India provides  fiscal  support  to  eligible applicants for setting up of Display Fabs which is aimed at attracting large investments for setting up TFT LCD / AMOLED based display fabrication facilities in the country. The Scheme provides fiscal support of up to 50% of Project Cost subject to a ceiling of INR 12,000 crore per Fab.
- iii. Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab  and  Semiconductor  Assembly,  Testing,  Marking  and  Packaging  (ATMP)  / OSAT facilities in India: The Scheme provides a fiscal support of 30% of the Capital Expenditure  to  the  eligible  applicants  for  setting  up  of  Compound  Semiconductors  / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab and Semiconductor ATMP / OSAT  facilities  in  India.  Four  companies  have  registered  on  ISM  portal  and  are  in process of completing the application. The scheme is initially open for a period of three years from 01.01.2022 for receiving the applications.
- iv. Design Linked Incentive (DLI) Scheme offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design. The scheme provides 'Product Design Linked Incentive' of up to 50% of the eligible expenditure subject to a ceiling of ₹15 Crore per application and 'Deployment Linked Incentive' of 6% to 4% of net sales turnover over 5 years subject to a ceiling of ₹30 Crore per application.

In  addition  to  the  above  schemes,  Government  has  also  approved  modernisation  of  SemiConductor Laboratory, Mohali as a brownfield Fab.

- (d): The aforementioned schemes have been opened for receiving applications from 01.01.2022. 04 registrations have been received on the ISM portal under Scheme for setting up of Compound Semiconductors  /  Silicon  Photonics  /  Sensors  Fab  and  Semiconductor  Assembly,  Testing, Marking and Packaging (ATMP) / OSAT facilities in India. The applications under this scheme can be submitted till 31.12.2024. Further, 41 registrations have been received on DLI portal for Design Linked Incentive (DLI) Scheme. The applications under this scheme can be submitted till 31.12.2024. No registration has been received yet for Scheme for setting up of Semiconductor Fabs in India and Scheme for setting up of Display Fabs in India, which are currently open till 15.02.2022.

States  like  Karnataka,  Telangana,  Tamil  Nadu,  Andhra  Pradesh,  Madhya  Pradesh,  Odisha, Tripura and UT of Dadra & Nagar Haveli and Daman & Diu have shown interest in facilitating setting up of semiconductor chip manufacturing facilities. These states have also indicated the availability of stable power supply and sufficient water supply for chip manufacturing facilities.

- (f):  Other  steps  taken  by  the  Government  for  making  the  country  self  reliant  in  electronics manufacturing are as follows:
1. National  Policy  on  Electronics  2019: The  National  Policy  on  Electronics  2019  (NPE 2019) has been notified on 25.02.2019. The vision of NPE 2019 is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and  driving  capabilities  in  the  country  for  developing  core  components,  including chipsets, and creating an enabling environment for the industry to compete globally.
2. 100%  FDI: As  per  extant  Foreign  Direct  Investment  (FDI)  policy,  FDI  up-to  100% under  the  automatic  route  is  permitted  for  electronics  manufacturing  (except  from countries  sharing  land  border  with  India),  subject  to  applicable  laws  /  regulations; security and other conditions.
3. Electronics Manufacturing Clusters  (EMC)  Scheme: Electronics Manufacturing Clusters Scheme was notified on 22nd October, 2012 to provide support for creation of world-class  infrastructure  along  with  common  facilities  and  amenities  for  attracting investment.  Under  the  Scheme,  19  Greenfield  EMCs  and  3  Common  Facility  Centres (CFCs)  measuring  an  area  of  3,464  acres  with  total  project  cost  of  INR  3,762  crore including Government Grant-in-Aid of INR 1,538 crore have been approved.
4. Electronics Development Fund (EDF): Electronics Development Fund (EDF) has been set up as a 'Fund of Funds' to participate in professionally managed 'Daughter Funds' which  in  turn  will  provide  risk  capital  to  startups  and  companies  developing  new technologies  in  the  area  of  electronics  and  Information  Technology  (IT).  This  fund  is expected to foster R&D and innovation in these technology sectors. INR 409 crore has been committed through EDF to 9 Daughter Funds with a targeted corpus of INR 2,626 crore.
5. Phased  Manufacturing  Programme  (PMP) has  been  notified  to  promote  domestic value  addition  in  mobile  phones  and  their  sub-assemblies  /  parts  manufacturing.  As  a result,  India  has  rapidly  started  attracting  investments  into  this  sector  and  significant manufacturing capacities have been set up in the country. The manufacturing of mobile phones  has  been  steadily  moving  from  Semi  Knocked  Down  (SKD)  to  Completely Knocked  Down  (CKD)  level,  thereby  progressively  increasing  the  domestic  value addition.
6. Tariff Structure has been rationalized to promote domestic manufacturing of electronic  goods,  including,  inter-alia,  Cellular  mobile  phones,  Televisions,  Electronic components, Set Top Boxes for TV, LED products and Medical electronics equipment.
7. Exemption  from  Basic  Customs  Duty  on  capital  goods: Notified  capital  goods  for manufacture  of  specified  electronic  goods  are  permitted  for  import  at  'NIL'  Basic Customs Duty.
8. Simplified  import  of  used  plant  and  machinery: The  import  of  used  plant  and machinery  having  a  residual  life of at least 5 years for use by  the electronics manufacturing  industry  has  been  simplified  through  the  amendment  of  Hazardous  and Other Wastes (Management and Transboundary Movement) Rules, 2016, vide Ministry of Environment, Forest and Climate Change Notification dated 11.06.2018.
9. Relaxing the ageing restriction: The Department of Revenue vide Notification No.60/2018-Customs dated 11.09.2018 has amended the Notification No.158/95Customs dated 14.11.1995,  relaxing  the  ageing  restriction  from  3  years  to  7  years  for specified electronic goods manufactured in India and re-imported into India for repairs or reconditioning.
10. Public Procurement (Preference to Make in India) Order 2017: To encourage 'Make in  India'  and  to  promote  manufacturing  and  production  of  goods  and  services  in  India with  a  view  to  enhancing  income  and  employment,  the  Government  has  issued  Public Procurement  (Preference  to  Make  in  India)  Order  2017  vide  the  Department  for Promotion of Industry and Internal Trade (DPIIT) Order dated 15.06.2017 and subsequent revisions vide Orders dated 28.05.2018, 29.05.2019, 04.06.2020 and 16.09.2020.  In  furtherance  of  the  aforesaid  Order,  MeitY  has  notified  mechanism  for calculating  local  content  for  13  Electronic  Products  viz.,  (i)  Desktop  PCs,  (ii)  Thin Clients,  (iii)  Computer  Monitors,  (iv)  Laptop  PCs,  (v)  Tablet  PCs,  (vi)  Dot  Matrix Printers, (vii) Contact and Contactless Smart Cards, (viii) LED Products, (ix) Biometric Access  Control  /  Authentication  Devices,  (x)  Biometric  Finger  Print  Sensors,  (xi) Biometric Iris Sensors, (xii) Servers, and (xiii) Cellular Mobile Phones, for procurement to be made from local suppliers.
11. Compulsory Registration Order (CRO): MeitY has notified 'Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012' for  mandatory  compliance  to  ensure  safety  of  Indian  citizens  by  curbing  import  of substandard  and  unsafe  electronic  goods  into  India.  63  Product  Categories  have  been notified under the CRO and the order is applicable on 63 product categories.
12. Establishment of Gallium Nitride (GaN) Ecosystem Enabling Centre and Incubator: The project for 'Establishment of Gallium Nitride  (GaN)  Ecosystem Enabling  Centre  and  Incubator  for  High  Power  and  High  Frequency  Electronics'  has been  approved.  The  project  is  being  implemented  by  Society  for  Innovation  and Development (SID), Centre for Nano Science and Engineering (CeNSE), IISc Bengaluru.

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