The Central government has stepped up efforts to finalise a multi-million-dollar plan to incentivise manufacturing of semiconductors in the country, according to a report. The plan comes at a time when the global chip shortage has led to massive production cuts in the automobile and electronics industry despite strong consumer demand during the festive season.

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The government may offer tariff cuts in some components, financial support on capital expenditure, and benefits through production-linked incentives (PLI) or Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), a Times of India report said.

Senior government officials are said to be in talks with global semiconductor makers like Intel, Taiwan Semiconductor Manufacturing Co. (TSMC), Intel, Fujitsu, AMD, United Microelectronics Corp. The plan, which involves multiple ministries, is being monitored by the Prime Minister’s Office (PMO), the report added.

According to a senior official involved in the discussed quoted in the report, the government is willing to talk about capital support. The government is ‘closer to it like never before’, claimed the official.

Recently, telecom and IT minister Ashwini Vaishnaw and minister of state for IT Rajeev Chandrasekhar along with representatives from the electronics, IT and telecom ministries met principal scientific adviser K VijayRaghavan, top scientist and Niti Aayog member VK Saraswat and representatives from Defence Research and Development Organisation (DRDO), surface transport and space departments and the academia to discuss the matter.

Although India is strong in the area of chip design, it has been unable to set up Semiconductor Wafer Fabrication (Fab) units. One of the biggest hurdles is that the industry requires massive investments ranging from $5 billion to $10 billion. Also, manufacturing a single chip requires a huge amount of clean water and uninterrupted power supply which are also big challenges in India.

There is huge demand for semiconductor chips in India among electronic goods manufacturers, automobile, defence, space and new-age technology industries. At present, the country imports all semiconductors to meet demand of $24 billion, which is likely to reach $100 billion by 2025. The government hopes that the soaring demand will prompt global manufacturers to invest in India.

Due to the chip shortage the car manufacturers have piled up around 5 lakh pending orders this festive season, news agency PTI reported recently. India’s largest car maker Maruti Suzuki alone has pending orders in the range of 2.15 lakh to 2.2 lakh units.

(Edited by : Anshul)

First Published:Nov 1, 2021 4:18 PM IST