Lok Sabha Question No. 80 (UNSTARRED), answered on 2022-02-02
Subject: Chip Exports
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Vijayakumar (alias) Vijay Vasanth

## GOVERNMENT OF INDIA

## MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 80

TO BE ANSWERED ON: 02.02.2022

## CHIP EXPORTS

## 80. SHRI VIJYAKUMAR (ALIAS) VIJAY VASANTH:

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

- (a)  whether  the  Government  has  approved  Rs.76,000  crore  scheme  for  chip  making  in  the country and if so, the details thereof; and
- (b) whether the above said scheme would help in tiding over chip shortage, promotion of more employment opportunities in various sectors in the country and also help in chip exports, if so, the details thereof and if not, the reasons therefor?

## ANSWER

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

(a): 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.

Following four schemes have been introduced under the aforesaid programme:

- 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.
- 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. Further, approval was also granted for the setting up of  India Semiconductor Mission (ISM) as an Independent Business Division within Digital  India  Corporation  having  administrative  and  financial  autonomy  to  drive  India's strategies for developing semiconductors and display manufacturing ecosystem. Envisioned to be led by global experts in the Semiconductor and Display industry, the ISM will serve as the nodal agency for efficient, coherent and smooth implementation of the schemes.

- (b):The  chip  shortage  has  impacted  many  industries  worldwide  with  auto  and  consumer electronics  industries  among  the  most  affected  sectors.  The  shortage  first  emerged  after  the Covid-19 pandemic, due to lockdowns and restrictions. The supply side problem has transformed into a demand side problem as economies started recovering which increased the consumption of electronic goods across various segments. Some key reasons behind the global chip shortage are supply chain disruptions, geographic concentration of electronic manufacturing, a sharp rise in demand for consumer electronic goods and rapid digitization of many sectors of the economy.

Semiconductors  are  essential  to  virtually  all  sectors  of  the  economy-  including  aerospace, automobiles,  communications,  clean  energy,  information  technology,  and  medical  devices. Demand for these critical components has outstripped supply, creating a global chip shortage and resulting in lost growth and jobs in the economy. The shortage has exposed vulnerabilities in the semiconductor  supply  chain  and  highlighted  the  need  for  increased  domestic  manufacturing capacity. Digital India's  Semicon  India  programme  is  expected  to  surely  play a role in

India's semiconductor, chip,  display  requirements  in  the  medium  and  long  term.  The  programme  has broader  objectives  of  ensuring  a  globally  competitive  value  chain  that  is  based  in  India  but supplies  electronics  products,  semiconductors  and  technology  services  and  solutions  to  the world.

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