Budget 2024: Rs 6,903 cr allocation for semiconductor scheme could mean more plans in pipeline

For its dream to make India a semiconductor nation, the government of India is taking small yet important steps towards turning this dream into reality. After announcing Rs 76,000 crore incentive for semiconductor and display fabs back in December 2021, allocating Rs 3,000 crore in Budget 2023-24, and now once again allocating Rs 6,903 crores in the interim budget 2024-25, 2024 will be a break-out year for this sector in India.

“An increase of more than 200% increase in semiconductor & display manufacturing from Rs 3,000 crore to Rs 6,903 crore is the indication of things to come towards making India a rising Semiconductor Product Nation. The year 2024 will be a break-out year for this sector with one large OSAT project by Micron already approved and more than are under evaluation,” says Satya Gupta, president, VLSI society. 

Following the budget allocation, Ashok Chandak, IESA President stated, “Out of Rs 6,903 crores, a significant chunk of Rs 4,203 crore has been earmarked for incentives for ATMP. This is expected to benefit announced and new projects by companies like Micron, Foxconn-HCL joint venture, and Tata Group, etc and invite renewed interest in ATMP sector. Rs 1,500 crores is designated for semiconductor fab or electronic chip plants that will spur the compound semiconductors and sensors manufacturing, Rs 900 crore support for the Mohali-based semiconductor laboratory, and Rs 200 crore for the design-linked incentive scheme to add to design and IPR development in India.”

Currently, over 12 large projects are under discussion between investors and government as per information available in public domain. These includes Tata Electronics (Semiconductor Fab & OSAT), Tower Semiconductor (Semiconductor Fab), Silicon Power (Compound Semiconductor Fab), SICSEM (Compound Semiconductor Fab)

CG Power (Compound Semiconductor Fab & OSAT), Tarq Semiconductors (Compound Semiconductor Fab & OSAT),Kaynes Technology (OSAT), HCL-Foxconn (OSAT) and Vedanta Display fab. However, the government has made Production Grade Technology a must requisite for approving any of these projects.

“It is expected that the government evaluation of these projects will be completed in the next few months and the total investment may reach about $10 Billion including existing projects. This may require a total outlay of about 10,000 Crores for the financial year 2024-25. The increased amount for the outlay from the existing 6,900 Crores allocated can be planned in the full budget after the approval status is known in the next couple of months,” adds Gupta.

Hitesh Garg, Vice President, and India Managing Director, NXP Semiconductors believes the Budget 2024 is giving a strong push to the semiconductor and electronics manufacturing sector in India. He says, “the semiconductor industry is at the heart of innovation, and the rise to Rs 6,903 crore in the budgetary allocation for its development, including support for capex and research, is an important step. I believe that these strategic moves will not only accelerate the growth of the semiconductor industry but also elevate India's position as a preferred destination for the electronics system design and semiconductors.”

While Garg is excited about these opportunities and look forward to collaborating with stakeholders in the industry, NXP Semiconductors hasn’t revealed any plans for setting up a fab or ATMP in India yet.

However, the industry is upbeat that the budget 2024-25 is surely a strong step in the direction of making India a rising Electronics and Semiconductor Product Nation.

Also Read: Interim Budget 2024: Why the income tax rebate or slabs were not revised? Here's what FM Sitharaman said