Lok Sabha Question No. 1760 (UNSTARRED), answered on 2021-12-08
Subject: Semiconductor Chip Manufacturing
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Rajyavardhan Singh Rathore

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 1760

TO BE ANSWERED ON: 08.12.2021

## SEMICONDUCTOR CHIP MANUFACTURING

## 1760. COL. RAJYAVARDHAN RATHORE:

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

- (a) the details of the Government action plan towards boosting semiconductor chip manufacturing and funding its research incentives in India in the light of global shortage;
- (b) the details of the Government action plan in providing stable electricity and water supply for the highly sophisticated chip manufacturing hubs, whetherany specific areas have been identified for the same, if so, State-wise details of such areas including in the state of Rajasthan;
- (c)  whether  the  Government is  collaborating  with  any  industrial  bodies  and  Institutes  of  National Importance to develop a body of expertise to become a global leader in semiconductor chip industry, if so, details of such collaborations; and
- (d) whether the government is considering any incentive based scheme to promote the expertise and industry knowledge of assembly and testing of chips in India or any other collaboration with foreign countries  or  Institutes  of  National  Importance  towards  the  same  objective  and  if  so,  the  details thereof?

## ANSWER

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

(a):  Government is fully cognizant of the importance of semiconductor design and manufacturing for India to become an electronics manufacturing hub of the world in the post-covid scenario. It has been  making  serious  efforts  to  promote  semiconductor  design  and  also  to  set  up  Semiconductor wafer fabrication facilities in the country.

Semiconductor wafer fabrication facilities are currently available in India in limited capacities for strategic  applications  at  Semi-Conductor  Laboratory  (SCL)  Mohali,  Gallium  Arsenide  Enabling Technology  Centre  (GAETEC),  Hyderabad  and  Society  for  Integrated  Circuit  Technology  and Applied Research (SITAR), Bengaluru.

Semiconductor FABs are highly capital intensive and resource intensive, and are at the cutting edge of manufacturing with rapidly changing technology cycles. Further, the semiconductor fabrication capability  for  leading  /  cutting  edge  technology  nodes  is  available  with  only  few  companies globally.

Government has approved the following projects in the area of semiconductors:

- 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),  under  the  auspices  of  Indian  Institute  of  Science (IISc) at Centre for Nano Science and Engineering (CeNSE), Bengaluru at the 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. Following incentives are available to companies for setting up of Semiconductor Fabrication (FAB) facilities in India:
5. (i) A financial incentive of 25% on capital expenditure for setting up of semiconductor fabrication  units  under  the  Scheme  for  Promotion  of  manufacturing  of  Electronic Components  and  Semiconductors  (SPECS).    The  capital  expenditure  inter-alia includes R&D  expenditures  subject  to  a  ceiling  of 20%  of  the  total capital expenditure.
6. (ii) Capital  goods  for  setting  up  of  Semiconductor  FAB  are  exempted  from  Basic Customs Duty (BCD).
7. (iii) Investment linked deduction under Section 35AD of the Income-tax Act.
8. (iv) Deduction of expenditure on research and development as admissible under Section 35(2AB) of the Income-tax Act.
9. (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).

(b):  States  like  Karnataka,  Telangana,  Tamil  Nadu,  Andhra  Pradesh,  Madhya  Pradesh,  Odisha, Tripura and UT of Dadra and 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. However,  the  decision  regarding  the  location  of  chip  manufacturing  facility  lies  with  companies proposing to setup such facilities based on various other parameters including availability of stable power supply and sufficient water supply.

(c):  Ministry  of  Electronics  and  Information  Technology  (MeitY),  Government  of  India  engages with  many  industry  bodies  and  Institute  of  National  Importance  on  a  regular  basis  in  order  to promote  the  holistic  ecosystem  of  electronics  manufacturing  in  India  including  semiconductors. Some  such  collaborations  of  Ministry  of  Electronics  and  Information  Technology  include  the following:

- i. Fabless Chip Design Incubator (FabCI) at Indian Institute of Technology, Hyderabad.
- ii. Gallium Nitride (GaN) Ecosystem Enabling Centre and Incubator for High Power and High Frequency  Electronics  at  Centre  for  Nano  Science  and  Engineering  (CeNSE),  Indian Institute of Science (IISc) Bengaluru
- iii. Microprocessor Development Programme with various Institutes of Higher Education
- iv. National Centre of Excellence for Next Generation AMOLED Displays, OLED Lighting and OPV Products at IIT-Madras
- v. National Centre of Excellence in Large Area Flexible Electronics (NCFLEX) at IIT-Kanpur
- vi. National Centre of Excellence for Technology on Internal Security (NCETIS) at IIT-Bombay
- vii. Centre  on  Excellence  (CoE)  on  Medical  Electronics  and  Bio-Physics  set  up  at  Andhra Pradesh MedTech Zone (AMTZ)
- viii. Various state-of the-art ASICs / SoCs such as indigenous Microprocessors, NavIC Receiver, Bluetooth  Transceiver,  etc.,  have  been  designed  and  developed  for  societal  and  strategic applications. Under the Microprocessor Development Programme, a family of 32-bit / 64-bit SHAKTI, VEGA and AJIT processors have been designed and developed by IIT Madras, CDAC and IIT Bombay, respectively, using Open Source ISA (Instruction Set Architecture).

Further, Government is open for any technological & financial collaborations and investments that would help India in developing semiconductor chip manufacturing ecosystem.

- (d):  Following incentive based schemes of Government of India promote the expertise and industry knowledge of Assembly, Testing, Marking and Packaging of semiconductor chips in the country:
- i. The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)  provides  financial  incentive  of  25%  on  capital  expenditure  for  the  electronic components,  semiconductor/  display  fabrication  units,  Assembly,  Testing,  Marking  and Packaging (ATMP) units, specialized sub-assemblies and capital goods for manufacture of aforesaid goods.
- ii. Production  Linked  Incentive  Scheme  (PLI)  for  Large  Scale  Electronics  Manufacturing Round 1 and Round 2 offered a production linked incentive to boost domestic manufacturing and  attract  large  investments  in  mobile  phone  manufacturing  and  specified  electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units.

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