The government will be open to negotiating new incentives
Over 20 semiconductor manufacturing and designing companies in high-end, displayand specialty fabrication have submitted expressions of interest (EOIs) to set up manufacturing plants in India. Of this, two-three are ‘very serious’ projects, according to the India Electronics and Semiconductor Association (IESA).
“The government is looking at at least 3-4 companies leveraging this incentive or showing expression of interest. They do not want to fix what kind of incentives they want to provide. Once they have EOIs, they will customise incentives based on the company’s area of work, type of fab, and requirement. It will not be a one-size-fits-all solution and that is going to be USP of fab incentives this time compared to the traditional approach of take it or leave it,” Rajeev Khushu, chairperson, IESA told BusinessLine declining to name the companies.
The government has been trying to bring a semiconductor fabrication unit to India for many years now however earlier schemes had failed to attract actual investments.
But this time Khushu reckons that there could be serious players since the Government is engaging with companies to understand what kind of incentives are required.
‘Open to hiking incentive’
“There are (existing) incentives which are already in place like $1 billion incentive per chip company wanting to set up their manufacturing unit in the country. The government is open to increase the incentive amount depending on the investment the company is bringing to the country. They wanted to mention a figure to create interest, but this also means that they are not restricting the figures to $100,000 or $1 million or a billion. As the government starts engaging with the companies participating, clarity on incentives will start becoming apparent.” The customised incentive approach was recommended by IESA.
“India has a large pool of engineers working in the semiconductors space, right from product defining up to fabrication. Even testing and validation of chips happens within the country once we receive engineering samples from the fab…All the countries are looking at having fabrication within the country not because they have demand, but it makes sense from a security and supply chain perspective to have fab within-country while becoming a part of the global supplier as well,” he said.
Khushu estimated that the sector has been growing at a CAGR of around 15 per cent for several years now although on a low base. Along with steady growth there has been an increasing demand for electronics owing to the younger population in India. All of these factors are early signs of expected growth, he said.