India makes a $10 billion bet to woo chip makers at home

• The ₹76,000 crore ($10 billion) semiconductor PLI scheme is aimed at setting up an entire ecosystem of chipset manufacturing in India.
• The government has also announced a programme to create a workforce of 85,000 highly qualified engineers over the next 20 years.
• In total, the Indian government has earmarked over ₹2,30,000 crore towards various PLI schemes for electronics manufacturing.

The Indian government announced on Wednesday an ambitious production-linked incentive (PLI) scheme worth ₹76,000 crore (around $10 billion at current rates) for establishing a semiconductor ecosystem in the country as it seeks to capitalise on the China Plus One sentiment that has been gathering steam in the post-pandemic world.

China Plus One refers to reducing dependency on supply chains only in China, and diversifying business into other countries.

The announcement was made at a press conference by Union Ministers Anurag Thakur, Ashwini Vaishnaw and Gajendra Singh Shekhawat. The ministers also revealed finer details of the scheme, in addition to the fact that 85,000 engineers would be supported over the course of next 20 years, with Vaishnaw quipping that they are the “brains behind the chipsets”.

Semiconductor chipsets are used across a wide range of consumer electronics, including smartphones, laptops, computers, cars, smart home appliances like lights, fans and many other things.

“Going forward, any country which does not learn how to make wafers [semiconductors] will be left behind,” Vaishnaw added, underlining the importance of achieving self-reliance in this highly critical sector.

The timing of the semiconductor PLI scheme is also crucial, when companies across the world have been suffering a semiconductor shortage that has been going on for several months now.

This is not the first time that the government has announced a PLI scheme for the electronics industry. Earlier last year, a ₹50,000 crore PLI scheme was announced to woo electronics manufacturing, including smartphones.

Earlier in November, media reports suggested that the government was working on the finer details of the semiconductor PLI scheme, and a month later, the economy got some good news to cheer.

Highlights of the ₹76,000 crore semiconductor PLI scheme

Semiconductor fabs and display fabs: Financial support of up to 50% of project cost for eligible applicants.

Semi-conductor laboratory: The electronics ministry will take the required steps for modernisation of the semiconductor laboratory.

Compound semiconductor units: Financial support of up to 30% of capital expenditure.

Semiconductor design companies: Design-linked incentives of up to 50% of eligible expenditure.

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