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Cabinet approves 50% incentive of project cost for setting up semiconductor units

The Union Cupboard on Wednesday authorised a uniform incentive of fifty% of the venture value for establishing semiconductor, show and compound semiconductor fabrication items.

The 50% fiscal help to all three schemes was based mostly on a unanimous suggestion by an advisory committee consisting of consultants from world wide, the Ministry of Electronics and Data Know-how mentioned.

Beforehand, the three schemes had an incentive vary of 30-50%.

Whereas incentives for establishing semiconductor fabrication had been based mostly on the scale of the chip, for show fabrication and compound semiconductor fabs, the incentives had been largely 30% of the full value of the venture.

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“Given the area of interest expertise and nature of compound semiconductors and superior packaging, the modified programme shall additionally present fiscal help of fifty% of capital expenditure in pari-passu (equal footing) mode for establishing of compound semiconductors, silicon photonics, sensors and discrete semiconductors fabs,” the ministry mentioned in an announcement.

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The modifications within the scheme intention to harmonise the incentives for numerous classes, Minister of State for Electronics and IT, Rajeev Chandrasekhar, mentioned.

“The modifications within the semiconductor coverage that had been introduced in December 2021 level to a method on the a part of the federal government the place we’re harmonising the motivation schemes beneath the assorted classes of semiconductor fab, show fab and compound semiconductor fabrication,” Chandrasekhar mentioned. “By doing this, the semiconductor coverage is extraordinarily aggressive and attracts investments throughout the spectrum – which is silicon, compound and fabs.”

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When the federal government introduced the scheme in December final 12 months, superior nodes reminiscent of 28 nanometre (nm) stood to draw greater incentives than others reminiscent of 65 nm.

The federal government, nevertheless, determined {that a} uniform incentive needs to be given to all schemes to make sure the presence of gamers in all segments, Chandrasekhar added.

Inside the nation, the demand for semiconductors within the 65 nm node and above is 50% of the full demand, he added.

The Union Cupboard on Wednesday additionally eliminated the Rs 12,000 crore incentive restrict for establishing show fabrication items and permitted firms that manufacture semiconductor nodes above 65 nm to use for incentives beneath the semiconductor manufacturing scheme.

A senior government at ISMC Analog, one of many fab incentive candidates, advised ET that the consortium had pushed for making the upfront incentive slab at 50% for all, “each verbally and in writing to ISM throughout our June assembly.”

Earlier, a senior government with the
Vedanta-Foxconn joint venture had mentioned that the main target was on the 28 nm section, utilized in smartphones and different superior devices.

ISMC Analog, which has utilized for a $3-billion fab unit in Karnataka, had fastened its goal across the 65 nm part, for which the motivation has jumped from 30% of the venture value to 50% now.

It isn’t clear but as to which node the opposite consortium, IGSS Ventures, would concentrate on.

On show fabs, candidates reminiscent of Vedanta and Elest stand to profit from the upper incentives.

“In some sense, it seems that the federal government has listened to all stakeholders and realised that candidates are struggling to reach at a choice on the nodes, therefore they’ve simplified it,” Arun Mampazhy, a semiconductor business veteran, advised ET.

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