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Union Cabinet approves 50% incentives for semiconductor manufacturing

The government had earlier announced 30-50 per cent incentives for different categories. Now the incentive has now been kept flat at 50 per cent for all categories. 

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New Delhi: The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved 50 per cent financial incentives for manufacturing of semiconductor fabs across technology nodes as well as for compound semiconductors, packaging, and other chip facilities.

The government had earlier announced 30-50 per cent incentives for different categories. Now the incentive has now been kept flat at 50 per cent for all categories. 

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Besides, the he incentive so far was for 65 nm size, but now this restriction has been removed and all sizes will be covered.  

“Given the niche technology and nature of compound semiconductors and advanced packaging, the modified programme shall also provide fiscal support of 50% of Capital Expenditure in pari-passu mode for setting up of compound semiconductors / silicon photonics / sensors / Discrete semiconductors fabs and ATMP/OSAT,” a Cabinet release stated.

It further said that the modified programme, will expedite investments in semiconductor and display manufacturing in India. 

On the basis of discussion with potential investors, it is expected that work on setting up of the first semiconductor facility will commence soon, the release added.

Briefing on the Cabinet decision, Union Minister Anurag Thakur said that due to supply-chain disruption, many countries have announced financial incentives to companies for semiconductor manufacturing. 

Therefore the government has tweaked the existing scheme to attract companies, he said.

The Centre announced Rs 76000 crore for the development of the semiconductors and display manufacturing ecosystem in India in December 2021.

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