India’s Electronics and Semiconductor Policies and Schemes

India’s electronics and semiconductor policy framework is designed to reduce import dependence, strengthen supply chains, and build domestic capability in chip design, fabrication, testing, and packaging. It combines fiscal incentives, infrastructure support, and ecosystem-building measures to attract private investment and support high-value manufacturing.

India Semiconductor Mission

The India Semiconductor Mission is the nodal agency for developing a sustainable semiconductor and display manufacturing ecosystem in the country. It coordinates with industry and administers fiscal support for fabrication, packaging, display manufacturing, and design-linked activities.

• Nodal role: Drives long-term strategy for semiconductor and display manufacturing.
• Core function: Implements incentive programmes across the semiconductor value chain.
• Industry coordination: Works with private players to build domestic manufacturing capacity.

Major Incentive Schemes

Several schemes provide capital support and design incentives to encourage investment in electronics and semiconductor manufacturing. The objective is to reduce project risk and improve the viability of domestic production.

• Capital support: Helps offset the high upfront cost of semiconductor projects.
• Design support: Encourages Indian firms and startups to develop intellectual property.
• Project structure: Many incentives are linked to eligible expenditure or project cost.

National Policy on Electronics and PLI

The National Policy on Electronics provides the overarching framework for expanding domestic electronics production. It supports the development of high-value components, sub-assemblies, and specialised chemicals to create a more self-sustaining supply chain.

• Production Linked Incentive (PLI) Scheme: Offers cash incentives to eligible companies on incremental sales of goods manufactured in India.
• Target sectors: Large-scale electronics manufacturing, including mobile phones, IT hardware, and specified electronic components.
• Policy goal: Improve domestic value addition and competitiveness against global manufacturers.
• Manufacturing depth: Encourages investment beyond assembly into components and inputs.

Electronics Manufacturing Clusters and Infrastructure

The Modified Electronics Manufacturing Clusters scheme supports the creation of world-class infrastructure for electronics manufacturing units. It is meant to reduce common facility costs and make industrial ecosystems more efficient.

• Shared facilities: Testing labs, tool rooms, and utility grids.
• Implementation model: State governments and private developers collaborate to develop clusters.
• Minimum land area: Greenfield projects require a minimum of 20 acres.

Semiconductor manufacturing also depends on specialised support systems.

• Utility needs: Ultra-pure water and highly stable power supply are essential for fabrication plants.
• Industrial support: Industrial parks offer expedited land allotment and environmental clearances.
• Human capital: Training programmes at technical institutes help develop skills for cleanroom operations and chip design.

Fabrication, ATMP and Design Ecosystem

India’s semiconductor projects cover different stages of the value chain, from chip fabrication to assembly and testing. These facilities are being developed to serve consumer electronics, automotive systems, and telecommunications.

• Fabrication plants: Focus on large-scale production of integrated circuits using mature and advanced technology nodes.
• ATMP facilities: Assembly, Testing, Marking, and Packaging units handle the final stages of chip production.
• Joint ventures: Large projects are often driven by partnerships between domestic industrial houses and international semiconductor companies.
• Display and compound semiconductors: Expand India’s presence beyond conventional silicon chips.

The Design Linked Incentive scheme supports startups through deployment-linked payouts and reduces the risk of chip design. The Chips to Start-up initiative gives academic institutions access to electronic design automation tools and fabrication services for prototyping.

The Semiconductor Laboratory, Mohali, serves as a key research and development facility for prototyping and testing domestic designs.

Key Facts to Remember

• Initial budgetary outlay: The semiconductor mission was launched with an outlay of ₹76,000 crore.
• Design Linked Incentive cap: Support is capped at ₹15 crore per application.
• Material use: Compound semiconductors use materials like Gallium Nitride and Silicon Carbide.
• Purpose of compound semiconductors: Useful for high-power and high-frequency applications.
• ATMP role: Final stage where silicon wafers are diced into individual chips and packed.
• Manufacturing requirement: Semiconductor fabrication needs ultra-pure water and stable power grids.
• Strategic direction: India is also focusing on indigenous large multimodal models and specialised AI chips under the broader technology mission.

Key Prelims Takeaways

• India Semiconductor Mission is the nodal agency for the semiconductor and display ecosystem.
• Semiconductor Fab, Display Fab, and Compound Semiconductor schemes provide support up to 50% of project cost or capital expenditure.
• Design Linked Incentive promotes chip design startups and microprocessor-related innovation.
• PLI Scheme rewards incremental sales of goods manufactured in India.
• Modified Electronics Manufacturing Clusters build shared infrastructure for electronics units.
• 20 acres is the minimum land area for greenfield cluster projects.
• Mohali Semiconductor Laboratory remains an important R&D and prototyping facility.