Cabinet approves Rs 76,000-cr PLI scheme for semiconductors

In a move aimed at curtailing dependency on imports for semiconductors, the union cabinet today approved a Rs 76,000-crore Product-Linked Incentive (PLI) scheme for semiconductor and display manufacturing.

Announcing the decisions of the union cabinet in a press conference a short while ago, I&B minister Anurag Singh Thakur said, “The setting up of 'India Semiconductor Mission' will drive this sector. Incentives of Rs 2.3 lakh crore will be given.” Investment of Rs 76,000 crore will be made in the sector in the next six years.

Union minister for electronics and information technology Ashwini Vaishnav, who was also present in the briefing, said, “We have reached $75 billion electronics manufacturing today. With the pace at which the sector is growing, India will reach $300 billion in electronics manufacturing in next six years.”

“Around 20% of the engineers in the semiconductor industry in the world are from India. The decision has been taken today to design a C2S (Chips to Startup) program for 85,000 highly trained and qualified engineers,” Vaishnav added.

Various industries, such as automobile and mobile handset manufacturing, are facing challenges due to the global chip shortage, kicked off by the pandemic last year. To tackle the issue, the auto makers have now rationalised the number of semiconductors used in the manufacturing of automobiles. The semiconductor shortage is likely to continue for the next one year.

Sandeep Shah, Managing Partner, NA Shah Associates LLP, said, "Considering the severe shortage of parts, which virtually impacts all the industries irrespective of jurisdiction, the announcement of PLI in semiconductor industry is timely. Many industries as of date for want of electronic parts are not able to commit to delivery schedule and are reeling in backlog. The just in time inventory maintained by all-consuming industry is leading to challenges and in many cases curtailment of production.”

The move will come handy for the corporate groups like the Tatas, who are scouting for semiconductor manufacturing in the country. The group is reportedly in talks with three states to set up $300 million semiconductor facility.

In the union budget 2021-22, finance minister Nirmala Sitharaman announced an outlay of Rs 1.97 lakh crore for the PLI schemes in 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth. The union government, which is bullish on PLI, has pegged the minimum production in India as a result of the scheme at over $500 billion in five years.