Center Considers $20 Billion in Semiconductor Mission 2.0 Incentives

The Center is proposing a $20 billion package to boost the India Semiconductor Mission, which may greatly accelerate India's desire to become a semiconductor powerhouse. In order to increase the current incentives under ISM, the Ministry of Electronics and IT (Meity) has submitted a proposal to the finance ministry for approval. By December, the Union Cabinet is expected to give its final approval.Officials claim that Meity is working on an economic forecast study that will compare the first phase of ISM to other comparable international programs, such as those in the US, EU, and East Asia, and demonstrate the program's success and returns. While the EU has raised over €43 billion and nations like the US have implemented subsidies totaling $52 billion under the Chips Act, India wants to create a full-stack semiconductor ecosystem via design, production, and packaging.

The government has so far approved billion-dollar projects under ISM, including those from CG Power-Renesas, HCL-Foxconn, Micron, TSAT, and Tata Electronics-PSMC. It is anticipated that the first fabs would go online in 2025. Stronger incentives for design-linked schemes are anticipated to be introduced in the second phase to support domestic participants and to draw in foreign investors by creating a stable policy environment.Although India has made positive strides, industry analysts point out that chipmaking is still very competitive and capital-intensive. In order to secure their places in the semiconductor supply chain, multinational corporations from China, Japan, and South Korea are also spending billions of dollars through grants, tax exemptions, and direct funding.