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Cabinet clears Rs 76,000-crore incentive scheme for semiconductors

The Union Cabinet on December 15 cleared the production-linked incentive scheme (PLI) for semiconductors with the ambition of making the country an electronics hub as the shortage of microchips hurts industrial production.

According to a report by CNBC Awaaz, the government proposes to provide incentives worth Rs 76,000 crore for semiconductor production over the next six years.

“The scheme will include provision for 25 percent incentives on capital expenditure for establishing unit of Compound Semiconductor Wafer Fabrication (Fab), assembly, testing, and packaging facility,” the report added.

The policy comes at a time when the world is witnessing a severe crunch of semiconductors, a key component in all types of electronic devices. The supply has been disrupted as a result of the COVID-19 pandemic, which forced production centres to close intermittently.

In order to reduce India’s dependence on China, the government in March 2020 announced a scheme with an aim to give companies incentives on incremental sales from products manufactured in domestic units.

On November 11, 2020, the Union Cabinet had approved the Production-Linked Incentive (PLI) scheme for 10 sectors. The list included pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell battery, textile, food products, solar modules, white goods, and specialty steel.

The PLI scheme, according to the government, “will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology, ensure efficiencies, create economies of scale, enhance exports, and make India an integral part of the global supply chain.” Moneycontrol


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