India launches its Rs 1.27 lakh crore ($13.4 billion) Semicon 2.0 scheme to build a sovereign semiconductor ecosystem. The initiative offers a 30% capital subsidy and targeted design-linked incentives, offering startups up to Rs 15 crore ($1.6 million) in seed funding. Concurrently, Tamil Nadu announces a Rs 175 crore semiconductor park in Kancheepuram to draw Rs 2,000 crore in private investment. These moves align with projections that India's chip market will hit $155 billion by 2031, though a weakening rupee threatens to inflate import costs.
Semicon 2.0 scheme funding
- ▪The Semicon 2.0 framework offers a 30% capital subsidy and a five-year Production-Linked Incentive (PLI) for the semiconductor ecosystem, with total government support capped at 50% of eligible capital expenditure.
- ▪The Indian government notified the Rs 1.27 lakh crore (approximately $13.4 billion) Semicon 2.0 scheme to boost the national semiconductor ecosystem.
- ▪The Semicon 2.0 scheme is divided into six segments covering chip design, capital equipment manufacturing, semiconductor fabs, and assembly, testing, and packaging.
Chip design subsidies
- ▪Under the Semicon 2.0 design-linked incentive plan, small firms and startups can receive seed funding of up to 50% of project costs, capped at 150 million rupees ($1.6 million).
- ▪Venture or private equity-funded chip design firms and larger companies in India can access equity co-investment or royalty financing under the new semiconductor fund.
Tamil Nadu semiconductor park
- ▪The Kancheepuram Semiconductor and Electronics Manufacturing Park aims to attract Rs 2,000 crore in investments and provide direct and indirect employment to 5,000 people.
- ▪Tamil Nadu Chief Minister C. Joseph Vijay announced the establishment of a Semiconductor and Electronics Manufacturing Park at Maduramangalam in Kancheepuram district at a cost of Rs 175 crore.
India semiconductor market projections
- ▪The Kotak Mahindra Mutual Fund report projects that India's share of global semiconductor consumption will rise to approximately 9 percent by 2031.
- ▪India's semiconductor market is projected to reach $155 billion by calendar year 2031, representing a compound annual growth rate of 20 percent, according to a report by Kotak Mahindra Mutual Fund.
Manufacturing capability development
- ▪A weak rupee is causing a net double-digit cost overrun for Indian businesses relying on imported goods, reducing the dollar value of the Rs 76,000 crore subsidies announced in 2021 under the first phase of the India Semiconductor Mission.
- ▪Bengaluru-based chip startup Level Five Cartronics is seeking Outsourced Semiconductor Assembly and Test (OSAT) partners in India, including CG Semi, Kaynes Semicon, and Suchi Semicon.
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