India’s Electronics and Semiconductor Policies and Schemes
The Indian government implements comprehensive policies and fiscal incentive schemes to establish the nation as a global electronics manufacturing and semiconductor design hub. These initiatives focus on reducing import dependency, securing critical supply chains, and fostering indigenous technology development through capital expenditure support, design incentives, and infrastructure enhancement for high-tech manufacturing ecosystems.
India Semiconductor Mission
The India Semiconductor Mission serves as the nodal agency for driving long-term strategies to develop a sustainable semiconductor and display manufacturing ecosystem. It administers fiscal support mechanisms and coordinates with industrial partners to establish domestic fabrication units. The mission oversees the implementation of various incentive programs for different segments of the semiconductor value chain.
Incentive Schemes and Financial Structures
Multiple government schemes provide financial assistance to attract private investment in electronics and semiconductor production. These schemes offer capital subsidies and design-linked incentives to encourage local manufacturing and innovation.
| Scheme Name | Target Area | Incentive Structure |
| Semiconductor Fab Scheme | Silicon CMOS-based fabrication plants | Up to 50 percent of project cost on a pari-passu basis |
| Display Fab Scheme | Display panel fabrication facilities | Up to 50 percent of project cost on a pari-passu basis |
| Compound Semiconductor Scheme | Packaging, testing, sensors, and compound chips | Up to 50 percent of capital expenditure |
| Design Linked Incentive | Chip design startups and microprocessors | Product design incentives up to 50 percent of eligible expenditure |
Electronics Manufacturing Frameworks
The National Policy on Electronics provides the overarching vision for expanding domestic production capabilities. These frameworks prioritize high-value components, sub-assemblies, and specialized chemicals to create a self-sustaining supply chain.
Production Linked Incentive Scheme
- This scheme provides cash incentives to eligible companies based on their incremental sales of goods manufactured in India.
- It targets large-scale electronics manufacturing, including mobile phones, IT hardware, and specified electronic components.
- The program aims to boost domestic value addition and improve the competitiveness of Indian manufacturing facilities against global rivals.
Modified Electronics Manufacturing Clusters
- The scheme supports the creation of world-class infrastructure for electronics manufacturing units.
- It provides financial assistance for setting up clusters with shared facilities like testing labs, tool rooms, and utility grids.
- State governments and private developers collaborate to build these specialized industrial zones.
Semiconductor and Display Fab Projects
Investment projects under the semiconductor mission are currently at various stages of implementation across several Indian states. These facilities utilize advanced node technology for manufacturing chips used in consumer electronics, automotive systems, and telecommunications.
Fabrication and ATMP Facilities
- Silicon fabrication plants focus on high-volume production of integrated circuits using mature and advanced technology nodes.
- Assembly, Testing, Marking, and Packaging units provide the final stages of chip production, ensuring the functionality and reliability of processed wafers.
- Joint ventures between domestic industrial houses and international semiconductor companies drive these large-scale manufacturing installations.
Design and Innovation Ecosystem
- The Design Linked Incentive scheme offers financial support and deployment-linked payouts to startups.
- It aims to reduce the risk associated with chip design and encourage the development of Intellectual Property within India.
- The Chips to Start-up initiative provides academic institutions with access to electronic design automation tools and fabrication services for prototyping.
Infrastructure and Support Mechanisms
Strategic support infrastructure ensures the operational success of complex manufacturing projects. These mechanisms address logistical and technical requirements unique to the semiconductor industry.
- Specialized power supply and water treatment plants support the intensive utility needs of fabrication facilities.
- Industrial parks offer expedited land allotment and environmental clearances for manufacturing units.
- Skilled human capital development programs operate across technical institutes to provide a workforce trained in cleanroom operations and chip design.
- The Semiconductor Laboratory in Mohali serves as the primary research and development facility for prototyping and testing domestic designs.
Facts on Electronics and Semiconductor Initiatives
- The initial budgetary outlay for the semiconductor mission stood at 76,000 crore rupees.
- Design Linked Incentive projects receive support capped at 15 crore rupees per application.
- Semiconductor fabrication requires ultra-pure water and highly stable power grids to prevent manufacturing defects.
- Compound semiconductors utilize materials like Gallium Nitride and Silicon Carbide for high-power and high-frequency applications.
- The Modified Electronics Manufacturing Clusters scheme requires a minimum land area of 20 acres for greenfield projects.
- ATMP facilities represent the final production phase where silicon wafers are diced into individual chips and housed in protective packages.
- India maintains focus on developing indigenous Large Multimodal Models and specialized AI chips under the broader technology mission.
