India will become a $64 billion semiconductor market hub by 2026, this is the government's plan

In December 2021, the government announced an incentive scheme of Rs 76,000 crore for the development of semiconductors and the display manufacturing ecosystem.

The country's semiconductor market is expected to reach $64 billion by 2026, with significant demand from sectors such as consumer electronics, telecommunications and IT hardware. According to a report, India's telecom stack as well as industrial applications are expected to account for two-thirds of the semiconductor market size. In 2019, the valuation of the country's semiconductor market was $22.7 billion. Tarun Pathak, research director at Counterpoint, says there is a huge opportunity in the short term driven towards domestic demand in applications such as sensors, logic chips and analog devices. Local sourcing is already happening in a significant way.

It had about 10% share in the total market in 2022. It is expected to see significant opportunities to support India's growing automotive and industrial sectors. In December 2021, the government announced an incentive scheme of Rs 76,000 crore for the development of semiconductors and the display manufacturing ecosystem. In September last year, the incentive was further enhanced by making financial assistance at 50% of the project cost, uniform across all technology nodes, for setting up a semiconductor fabrication facility. Earlier the fiscal support for various units was between 30-50%.

India Semiconductor Mission (ISM) CEO and Joint Amitesh Kumar Sinha said that India is committed to become a reliable partner in the global supply chain and we are working in this direction by formulating long-term policies keeping in mind the next 25 years. More than 70% of the project cost for semiconductor manufacturing is incentivized by the Central and State Governments in India, of which 50% is funded by the Central Government on an upfront basis while the rest is covered by the State Governments.

Government did not accept two proposals

Companies such as Vedanta-Foxconn JV, IGSS Ventures and ISMC have proposed to set up chip manufacturing plants with an investment of $13.6 billion and have sought government support of $5.6 billion under the incentive scheme. Two of the proposals received have not been approved by the government yet.

DLI scheme also started

In addition to semiconductor manufacturing units, the government has also launched a Design-Linked Incentive (DLI) scheme for the design and deployment of semiconductor designs for integrated circuits (ICs), chipsets, systems on chips (SoCs), systems and IP cores is included. A scheme for setting up display manufacturing units and setting up compound semiconductor/silicon photonics/sensor fabs and semiconductor assembly, testing, marking and packaging was also launched.

76 thousand crore applications were received

Overall, the government had received 23 applications for Rs 76,000 crore under the PLI scheme for semiconductors. The government has also approved the modernization of the Semiconductor Laboratory at Mohali as a brownfield manufacturing facility. According to Deloitte, with India becoming a major player in the global semiconductor value chain, the industry will further expand to a market size of $85 billion by 2030. The country's semiconductor market is expected to reach $55 billion by 2026.