India's Semicon Mission Set to Receive Crucial 8-Year Financial Boost

Nitin Konde, Apoorva Bajj

Sep 10, 2024 — 3 min read

India's Semicon Mission Set to Receive Crucial 8-Year Financial Boost

Reports indicate that government officials are contemplating a five-year extension of the budgetary assistance period under the second phase of the India Semiconductor Mission (ISM) to eight years.

According to a senior government official, applicants whose projects are approved under ISM Phase II may be eligible for additional financial grants to train their employees, an option for an additional interest-free loan from the government, and a preferential supply of domestically manufactured and packaged chips.

"After the first phase of the ISM was successfully implemented, we learned a lot." according to the official, they have been receiving feedback from industry professionals and experts all over the world and are making an effort to include as much of it as possible.

Possible Blueprint for Phase II

The source did mention that the second phase of the mission might see an increase in administrative spending and a withdrawal of funding for technology transfer costs.

According to a renowned media outlet, the IT ministry is reportedly planning to reallocate funds from the second phase of the ISM away from chip packaging factories and towards semiconductor fabrication companies in India.

An official said that the incentives for outsourced assembly and testing and assembly, testing, marking, and packing units would be reduced to less than 30% on a pari-passu basis in the next phase of the ISM, down from the present 50%.

According to the official, we will also include more explicit instructions for reimbursement in the proposal itself. These are the initial concepts that have been deliberated.

An additional incentive of 30–35% of the total capital expenditure used to establish units for gases, chemicals, raw materials, metals, and other metallurgy could be offered to successful candidates, according to the official.

5 Semiconductor Projects Approved by GOI

A chip manufacturing plant for Tata Group-Powerchip Semiconductor Manufacturing Corp in Dholera, Gujarat, and four chip packaging units, three in Sanand, Gujarat, and one in Morigaon, Assam, were sanctioned by the government as far under the first phase.

An investment plan to establish a semiconductor chip manufacturing unit at Taloja in Panvel, proposed by a joint venture between Tower Semiconductor and Adani Group, was authorized last week by a cabinet panel in Maharashtra. The proposed investment is $10 billion.

The Navi Mumbai suburbs in Raigad district are home to the projected Tower Semiconductor-Adani Group factory, which will initially have a capacity of 40,000 wafer starts per month (WSPM) and will subsequently be increased to 80,000 WPSM. The first phase investment will amount to INR 58,763 crore, while the second phase investment will account for the remaining INR 25,184 crore of the overall project investment.

This would be the sixth project of its kind to receive central government approval in India; if the ISM gives its blessing, it will become the country's second chip production facility.

Kaynes Semicon, headquartered in Mysore, has previously requested and received approval from the Union Cabinet to establish an outsourced assembly and testing operation in Sanand, Gujarat, costing INR 3,307 crore. It is anticipated that the Kaynes Semicon plant can produce 6.3 million chips daily.