The semiconductor companies and their industry associations on Tuesday urged the government to maintain a similar level of incentives, funding structure, and also support the chip components sector in the next leg of the India Semiconductor Mission (ISM).
The same assumes significance as the government is nearing the completion of the Rs 76,000 crore outlay announced under the ISM. So far, with a 50% subsidy, it has committed about Rs 62,000 crore of the overall outlay for five chip projects. Given that the government is evaluating 20 more proposals including large fab projects, it will have to expand the scheme outlay, industry executives said.
In a roundtable discussion with electronics and IT minister Ashwini Vaishnaw on Tuesday, about 30 companies including representatives of Tata, CG Power, L&T Semiconductor Technologies, Dixon, Reliance, Hinduja group, Micron, Kaynes, along with industry associations like India Electronics and Semiconductor Association (IESA), SEMI, India Cellular and Electronics Association (ICEA), among others, were present, official sources said.
The roundtable was part of the Semiconductor Executives’ Summit ahead of Semicon India event from September 11-13.
Besides focusing on a similar scale of incentives, the companies urged the government to improve the design linked scheme and allow larger companies to be eligible for subsidies as well.
“Most of the incentives today are towards (chip) manufacturing, which is fine. But 50-60% of the value of that product is on design,” V Veerappan, chairman of IESA, told FE.
According to Veerappan, ISM 2.0 should look at expanding the scope of the semiconductor design ecosystem to larger players who will generate the product intellectual property (IP) in India.
Currently, only 13 applications have received approval under the semiconductor design linked scheme as against the government target of 100. The scheme provides incentives of about Rs 15 crore per startup. Largely, most of the startups are focusing on one or two chips, and many don’t have access to external funds, according to industry executives.
Besides large funding, the challenge for the startups, part of the design scheme, is that they don’t have the customers, Veerappan said.
The government is largely looking at another $10 billion incentive scheme for the semiconductor sector. The thinking within the government at the moment is to have a couple of fabs, a couple of assembly and testing units, developing the components ecosystem, and the supply chain to increase the value addition.
“Each of the chip companies may need about 100 to 120 ecosystem partners like chemicals, gasses etc. Currently, those areas have to be supported by the government to bring in the supply chains,” Veerappan said.
On the semiconductor components ecosystem, the industry suggested the government to reduce the imports of the components and boost the domestic ecosystem as the demand is going to be very high.
In a bid to move towards lower end chip technologies as well going forward, the industry and the government also discussed advanced manufacturing research in the country.
Lately, semiconductor equipment providers like Lam Research have also been pushing on the research and development in the country through research labs and their tools.
Another area, where the industry wants the government to focus on is boosting display manufacturing in the country. Lately, ICEA chairman Pankaj Mohindroo also highlighted that the country has not been able to break ground beyond display assembly.
“Display has a major 15% to 20% position in the Bill of Material which is close to the other logic, memory and semiconductors. It’s a matter of great concern,” Mohindroo had said.
The same assumes significance in the sense that under the semiconductor incentive scheme, the government is also providing 50% fiscal support for setting up display fabrication. However, currently out of three applications received by the government for setting up display fabs, none has got approval.
From: financialexpress
Financial News
