Lok Sabha Question No. 1503 (UNSTARRED), answered on 2021-02-10
Subject: Semiconductor Wafer Fabrication and Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Sukanta Majumdar, Vinod Kumar Sonkar, Nisith Pramanik, Sangeeta Kumari Singh Deo, Jayanta Kumar Roy, Bhola Singh, Raja Amareshwara Naik

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 1503

TO BE ANSWERED ON: 10.02.2021

## SEMICONDUCTOR WAFER FABRICATION AND MANUFACTURING

## 1503.   DR. SUKANTA MAJUMDAR:

SHRI VINOD KUMAR SONKAR:

SHRI NISITH PRAMANIK:

SHRIMATI SANGEETA KUMARI SINGH DEO:

DR. JAYANTA KUMAR ROY:

SHRI BHOLA SINGH:

SHRI RAJA AMARESHWARA NAIK:

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

- (a) whether  there  is  any  commercial  Semiconductor  Wafer  Fabrication  manufacturing facility in the country and if so, the details thereof and if not, the reasons therefor;
- (b) whether in spite of approval of two proposals by the Government, there has been no response by the Industry and if so, the details thereof and the reasons therefor;
- (c) whether despite provision of capital subsidy to attract investment in setting up of Fab manufacturing, no proposal has been received by the Government so far;
- (d) if so, the reasons therefor;
- (e) whether India is dependent on imports of chips, spending billons of dollars thereon and if so, the details thereof; and
- (f) whether there is any need for development of semiconductor manufacturing ecosystem in the country and if so, the steps taken/being taken by the Government in this regard?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI SANJAY DHOTRE)

(a), (b), (c) and (d):  Government has been making serious efforts to set up Semiconductor wafer  fabrication  facilities  in  the  country.  There  is  no  commercial  Semiconductor  wafer fabrication (FAB) facility in the country at present. Government had approved two proposals for setting up of Semiconductor FAB facility in India - one from the consortium led by M/s. HSMC Technologies India Pvt. Ltd. (with ST Microelectronics and Silterra Malaysia Sdn. Bhd. as partners) and the other from consortium led by M/s. Jaiprakash Associates Ltd.  (with IBM, USA and Tower Semiconductor Limited, Israel as partners). Letter of Intent (LoI) dated 19.03.2014 was issued to both the consortia.

As  per  the  Letter  of  Intent  (LoI),  both  the  consortia  were  required  to  submit  certain documents  for  demonstration  of  commitment.  The  consortium  led  by  M/s.  Jaiprakash Associates  Ltd.  withdrew  their  proposal  on  02.03.2016  and  the  consortium  led  by  M/s. HSMC  Technologies  India  Pvt. Ltd. could not submit the requisite documents  for demonstration of commitment,  despite being provided extension of time on several occasions. Hence, the LoI issued to M/s.  HSMC Technologies India Pvt. Ltd. was cancelled on 20.04.2018. Therefore, both the proposals for setting up of semiconductor FAB facilities in the country could not materialize.

Semiconductor FABs are highly capital intensive and have to deal with constantly changing technology.  Further,  the  semiconductor  fabrication  capability  for  leading  /  cutting  edge technology nodes is available with only few companies globally.

- (e): In the absence of a commercial Semiconductor FAB facility, the country is dependent on imports  for  Semiconductor  Integrated  Circuits  (ICs).  As  per  the  Directorate  General  of Commercial  Intelligence  and  Statistics  (DGCI&S)  data,  Semiconductor  ICs  of  worth approximately INR 71,830 crore, and INR 51,261 crore have been imported in the country during FY 2019-20, and FY 2020-21(April-December), respectively.
- (f): The Government attaches high priority to electronics hardware manufacturing, including setting  up  of  Semiconductor  FAB  facilities,  and  it  is  one  of  the  important  pillars  of  both 'Make in India' and 'Digital India' programmes of Government of India. Following steps have been taken up for the development of Semiconductor manufacturing ecosystem in the country:
- I. The project for 'Establishment of Gallium Nitride (GaN) Ecosystem Enabling Centre and Incubator for High Power and High Frequency Electronics' to be implemented by Society  for  Innovation  and  Development  (SID),  being  converted  to  a  Section  8 company  titled  "Foundation  for  Science,  Innovation  and  Development"  under  the auspices of Indian Institute of Science (IISc), Bengaluru has been approved with total project cost of Rs. 298.66 crore.
- II. An application for setting up of Assembly, Testing, Marking and Packaging (ATMP) of NAND Flash memory has been approved under the Production Linked Incentive (PLI) Scheme for large scale electronics manufacturing.
- III. An  application  for  discrete  semiconductor  devices,  including  transistors,  diodes, thyristors, etc. and System in Package (SIP) has been approved under the Production Linked Incentive (PLI) Scheme for large scale electronics manufacturing.
- IV. Further,  following  incentives  are  currently  available  to  companies  for  setting  up  of Semiconductor FAB facilities in India:
- i. Financial incentive of 25%  on  capital expenditure under the  Scheme  for Promotion  of  Manufacturing  of  Electronic  Components  and  Semiconductors (SPECS) notified on April 1, 2020.
- ii. Capital  goods  for  setting  up  of  Semiconductor  FAB  are  exempted  from  Basic Customs Duty (BCD).
- iii. Investment linked deduction under Section 35AD of the Income-tax Act.
- iv. Deduction  of  expenditure  on  research  and  development  as  admissible  under Section 35(2AB) of the Income-tax Act.
- v. New domestic companies making fresh investment in manufacturing and starting operations before March 31, 2023 have an option to pay corporate income tax at reduced  rate  of  15%.  Such  companies  will  also  not  be  liable  to  pay  Minimum Alternate Tax (MAT).
- V. Ministry of Electronics & Information Technology (MeitY) has also issued a notice inviting  Expression  of  Interest  (EoI)  from  global  companies  /  consortia  desirous  of
- setting up Semiconductor FABs in India or Indian companies / consortia desirous of acquisition of Semiconductor FABs outside India.

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