New Delhi: The government Monday notified the Rs 1,27,500-crore Semicon 2.0 scheme. It cuts capital subsidies for chip fabrication plants, adds fiscal support for makers of semiconductor equipment, chemicals, gases and raw materials for the first time, and requires that strategically important chip designs be co-owned by a state agency and stay within the country.
Silicon fabs (semiconductor fabrication facilities) will get 40 percent of eligible capital expenditure. Compound-semiconductor fabs, display fabs and other specialised plants will get 35 percent. Both are lower than the flat 50 percent subsidy under Semicon 1.0, the Rs 76,000-crore programme notified in December 2021.The first phase paid mostly for fabrication and packaging plants. The new scheme spreads money across six pillars: Design, equipment and materials, fabs, ATMP (assembly, testing, marking and packaging) and OSAT (outsourced semiconductor assembly and test) packaging, research, and talent.
The Ministry of Electronics and Information Technology issued the notification. It sets out the framework for the scheme the Union Cabinet approved on 15 July, and divides eligible work into six pillars and ten categories.Electronics and IT Minister Ashwini Vaishnaw told reporters that global chipmakers no longer doubt India. “There is a significant level of confidence among the global semiconductor industry stakeholders that India is definitely the right place for making major investments in the coming decades,” he said.He described the incentives as “incidental part of it, it is not the core of the entire programme,” and pointed to India’s talent and policy certainty instead.The design pillar carries several conditions on ownership. IP developed under the strategic category will be co-owned by the applicant and the Centre for Development of Advanced Computing (C-DAC), and all design and development files must stay within India. C-DAC will not use the co-owned IP commercially unless the applicant fails to meet its obligations.Only companies incorporated, headquartered, owned and controlled by Indian citizens can apply under the strategic category, with Overseas Citizens of India also allowed on the commercial side. Startups can get seed funding of up to Rs 15 crore or half the project cost, whichever is lower, with equity co-investment above that.Vaishnaw said an expert panel chaired jointly by the Principal Scientific Adviser and the National Security Adviser will decide which chips count as strategic, across six groups: Compute, memory, radio frequency, power, networking and sensors. “There are about hundred chips, almost more than that, in these six buckets,” he said, naming aviation, transportation and consumer electronics.India imports almost all of its chipmaking equipment and most of its specialty chemicals, more than 90 percent and 85-90 percent respectively, and the equipment-and-materials pillar targets that.It offers 30 percent of capital expenditure for equipment and materials manufacturing and R&D, plus a production-linked incentive of up to 10 percent of domestically sourced bill-of-materials value from FY 2028-29. IT Secretary S. Krishnan said the aim was “self reliance and fostering a globally competitive industry”.Semicon 1.0 approved 12 projects across six states, with investment commitments above Rs 1.64 lakh crore. Three back-end units have started commercial production this year: Micron’s assembly-and-test plant, Kaynes Semicon and CG Semi’s OSAT facility, all in Sanand, Gujarat. All three package and test chips whose wafers are made abroad.India’s first fab, Tata Electronics’ Rs 91,000-crore plant at Dholera built with Taiwan’s PSMC (Powerchip Semiconductor Manufacturing Corporation), is due to be commissioned in 2028. Vaishnaw said one project began commercial production 13 months after groundbreaking.The India Electronics and Semiconductor Association welcomed the notification. Its president, Ashok Chandak, who also heads SEMI (Semiconductor Equipment and Materials International) India, said the speed from Cabinet approval to notification “sends a strong message of policy continuity, execution and commitment”, which matters “in an industry that makes investments with a 10-15 year horizon”.He said the scheme could “catalyse more than Rs 5 lakh crore cumulative private and industry investment over the next five to seven years” across fabs, packaging, equipment, materials, design, R&D and the supply chain, and cited the R&D focus on the 7-3nm (chip process nodes measured in nanometres, where a smaller number denotes a more advanced, densely packed chip) pathway, silicon photonics, Micro LED and compound semiconductors as differences from the first phase.Arjun Malhotra, co-founder of HCL and chairperson of the EPIC Foundation, said the focus on design would “significantly increase value addition within the country”, and welcomed the decision to open the scheme to companies owned by Overseas Citizens of India.“They bring rich global experience that will help create truly advanced design companies in India,” he said, calling the six defined areas of compute, memory, radio frequency, power, networking and sensors “exactly the right way forward”.The government has raised its skilling target to one lakh design engineers over five years, from 85,000 under Semicon 1.0. Vaishnaw said the earlier target was met in four years against a ten-year plan, and that chip-design facilities now run at 355 universities.The India Semiconductor Mission stays the nodal agency. Projects above Rs 500 crore need Cabinet approval. Applications will be open for three years, and a mid-term review is due after three years of implementation. Vaishnaw said the government would prioritise quality over the number of approvals: “We would rather err on the side of rejecting rather than accepting.”(Edited by Viny Mishra)
