The Government will soon put out a Request for Proposal (RFP) document seeking formal application from companies to set up semiconductor plants, ET reported.
Earlier this year, MeitY had invited applications from companies who wish to set up display fabrication units. However, the government would decide on the quantum of subsidy after it receives specific proposals. Since the government issued an expression of interest, nearly 20 companies have shown their willingness to invest, officials said.
Covid-19 massively affected supply chains
Covid-19 had a devastating effect on the manufacturing sector. Tata Sons Chairman N. Chandrasekharan talked about the conglomerate’s plans to enter the semiconductor space in order to reduce dependence on Chinese imports. The rapid emergence and evolution of digital technology have greatly impacted the automotive industry as well.
In recent times we’ve witnessed the rise of Electric Vehicles (EV). Despite the advantages of electric vehicles, India is still in its nascent stage. This is mainly due to the lack of policy support and other industry-specific challenges. While many countries such as China and Europe have started to adopt electric cars, India is yet to catch up.
The global shortage of chips has crippled several industries like automobiles and electronics due to the pandemic. This has spurred many companies to diversify operations to newer locations.
What is local manufacturing important?
Local semi-conductor manufacturing has gained vital importance. India is emerging as the biggest mobile consumer, and talks are in process between SpaceX and Indian firms to manufacture Satcom gear locally.
The Ministry of Civil Aviation has also notified the liberalized Drone Rules, 2021, which are expected to open up the sector drastically, again increasing the demand for semiconductors. Reliance and Adani are excited to increase drone production.
Alongside, the government is also planning to make India a data centre Hub, which would again spur the demand for semiconductors. The government plans to incentivise all these sectors for using locally manufactured products, putting the much-needed impetus on locally produced semiconductors.
The MeitY has not yet revealed the quantum of incentive it would provide to companies. However, it is believed that the government would set aside $ 1 billion for a fabrication unit, which requires a total investment of $2-$5 billion or more.