According to top sources who spoke to TOI, the Indian government is considering launching a new multibillion dollar incentive package for semiconductor businesses after almost depleting the Rs 76,000-crore fund that was established in December 2021 to promote investment companies.
Even while statements in this respect won't come until after the national elections, the new package's preliminary work has already started and is "in all likelihood be much bigger than the previous one," they claimed.
One of the insiders stated, "The new package would be one of the key agendas for the new govt and will be taken up on a priority basis," pointing out that new bids for semiconductors are being received that call for a new package.
The source stated that since some of the ideas are advanced and would need prompt assurances from the state on incentives, the topic will be brought before the next Cabinet.
The government is drafting a new package due to the Dec. 2021 package's success, particularly in light of the US and China's tough posture and their announcement of far larger packages for firms investing in semiconductors.
Under the present strategy, qualified display and semiconductor fabricators are able to get financial help from the government up to 50% of the project's cost. With the recent wave of investments, this has nearly run out.
After decades of trying, India had not received any credible proposals for semiconductor manufacturing. However, in June of last year, the country finally succeeded when American Micron became the first major player to enter the market with a Rs 22,500-crore testing and packaging unit in Gujarat.
Following this, three bids totaling close to Rs 1.3 lakh crore were approved in February of this year. These include the Rs 91,000-crore project by Tata Electronics to establish the first semiconductor manufacturing facility in India in Dholera, Gujarat, in partnership with Taiwanese Powerchip Semiconductor Manufacturing Corp; the Rs 27,000-crore Semiconductor Assembly and Test (TSAT) unit by Tata in Morigaon, Assam; and the Rs 7,600-crore project by CG Power in collaboration with Japanese Renesas Electronics and Stars Microelectronics of Thailand.
The government is now debating new suggestions that are at a fairly advanced level. Among them is a proposal for the nation's first display fab plant, put out by Japanese company Sharp, which might require investments as high as Rs 40,000 crore. Tower Semiconductors, an Israeli semiconductor manufacturer, has a proposal to spend Rs 90,000 crore in India.
The insider continued, "The proposals need urgent solutions, especially since the companies want clarity from the government on incentive support."