Speedy regulatory approvals to propel India’s semiconductor nation dream

In India’s pursuit of becoming a semiconductor nation, maintaining a conducive regulatory and business environment are being looked upon as key success factors in a recent report by the Information Technology and Innovation Foundation (ITIF), a Washington DC-based science and technology policy think tank. While India is taking time to diligently evaluate all proposals, it is fast tracking approval for semiconductor greenfield projects as compared to some of the leading nations.

An illustrative example is Micron's ATMP project, a US memory chip maker, which broke ground within three months of approval in June 2023. Sources close to the government states, Micron was the first greenfield semiconductor site project for India. That was one of the primary reasons why it took 3 months for regulatory and approval process. But going forward, India will further optimize the process based on lessons from the first project. 

India’s swift action can be attributed to several factors. The country has implemented one of the most competitive subsidy and incentive support packages, spanning both central and state levels, for a diverse portfolio of semiconductor manufacturing and packaging sites. These initiatives are strategically aligned with the varied demands of the growing Indian market. Notably, the central government is offering a substantial 50% incentive. Additionally, multiple states in the country have formulated semiconductor policies aimed at attracting fabrication units (fabs) and assembly test and packaging facilities (ATMPs). This concerted effort at both central and state levels enhances India's appeal and creates a conducive environment for semiconductor investments.

This is being looked upon as an incredible and unparalleled fast pace of execution to cater to semiconductor Greenfield projects in the country as compared to other nations, per industry experts. The recent example being cited is the fab site regulatory approval process in European Union’s Germany region for a high priority Intel fab project, for which EU is contributing subsidies to the tune of $11 billion. “To start the fab construction, Intel needs to get building permit regulatory approval for State Administration Office and then EU Commission’s Office approval for release of subsidies,” explains Danish Faruqui, CEO, Fab Economics. 

“To put timelines of regulatory processes in perspective, Intel submitted its application to State Administration Office for building/Fab permit, emissions control approvals for the legal areas of water law, waste, wastewater, soil protection, nature conservation law and other legal areas. 

All in all, Fab building permit process is at best a lengthy 9 months ordeal for the State’s highest priority semiconductor project,” adds Faruqui. 

If one puts this timeline in perspective of site economics, per Fab Economics R&A a year lost for a leading edge fab in Germany leads to a delay in realizing annual revenue of $8.1 billion from the same fab. 

“There is another strategic impact that stems for a yearlong regulatory and approval processes i.e. the state lags behind other nation by a generation (node) of leading-edge manufacturing technology given the competitive cadence of technology generation advancement in the industry. So, the effectiveness of $11 billion subsidies is reduced,” adds Faruqui. 

Faruqui adds, even though India’s Micron plant is a mega ATMP site as compared to Greenfield Fabs in the US and EU, it sets the benchmark for 3-4x faster regulatory and approval process in India.