Lok Sabha Question No. 612 (UNSTARRED), answered on 2022-07-20
Subject: Product Linked Incentive Scheme for Semiconductor
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Kanimozhi Karunanidhi

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA

## UNSTARRED QUESTION NO. 612

TO BE ANSWERED ON: 20.07.2022

## PRODUCT  LINKED INCENTIVE SCHEME FOR SEMICONDUCTOR

## 612.  SHRIMATI KANIMOZHI KARUNANIDHI:

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

- (a)  whether  the  Government  has  announced  a  Product  Linked  Incentive  Scheme  for Semiconductor manufacturing in December 2021 and if so, the details thereof;
- (b)  whether there are any studies conducted by the Government on the effectiveness of the scheme in semiconductor manufacturing industry;
- (c)  if so, the details thereof including any additional measures taken by the Government in tackling the global shortage of semiconductors; and
- (d)  if not, the reasons therefor?

## ANSWER

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

- (a): Government has notified Production Linked Incentive (PLI) schemes for Large Scale Electronics Manufacturing, IT Hardware, and other electronic products.  PLI schemes do not cover semiconductor fabs.

Government  is  focused  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 Atma Nirbhar Bharat 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 are 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 Rs. 15 Crore per application and 'Deployment Linked Incentive' of 6% to 4%  of  net  sales  turnover  over  5  years  subject  to  a  ceiling  of  Rs.  30  Crore  per application.

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

(a) :  Government  issued  a  notice  on  15.12.2020,  inviting  Expression  of  Interest  (EoI)  for setting up / expansion of existing Semiconductor wafer / device fabrication (FAB) facilities in India. This was followed by extensive promotion and stakeholder engagement over the EoI period. Based on industry responses, an understanding of requirement for capital, resources and infrastructure was  evolved  in line with the industry aspirations. After multiple stakeholder  consultations  with  industry,  academia,  research  organisations  and  government agencies,  a  comprehensive  'Program  for  development  of  semiconductors  and  display manufacturing ecosystem in India' was approved by the Government.

(b) and (d): The semiconductor chip shortage has impacted many industries worldwide with auto and 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 products across various segments. Some key reasons behind the global  chip  shortage  are  supply  chain  disruptions,  geographic  concentration  of  electronic manufacturing, rise in demand for digital and electronic products and digital adoption across the world. Semicon  India programme  is  expected to surely play a role in India's semiconductor chips and display requirements in the medium and long term. However, for short term, Government continues to engage with global OEMs, ODMs, Tier 1 companies as well as distributors to mitigate the problem of chip shortage.

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