India’s Semiconductor and Electronics Manufacturing Initiatives

January 23, 2025

India is making strides in the semiconductor and electronics manufacturing sectors as it prepares for the Union Budget 2025-26. The Union Finance Ministry has brought into light the government’s successful policies aimed at boosting investments and job creation through the semiconductor programme and the Production-Linked Incentive (PLI) scheme. These initiatives are crucial for establishing India as a global hub for semiconductor and electronic goods manufacturing.

Semiconductor Programme Overview

The ‘Programme for Development of Semiconductors and Display Manufacturing Ecosystem’ offers attractive incentives to semiconductor packaging and design companies.
Launched in December 2021, the Semicon India Programme has approved five semiconductor projects and supported 16 design companies.
This initiative is expected to attract investments of ₹1.52 lakh crore and create approximately 25,000 direct jobs, along with 60,000 indirect jobs.

Production-Linked Incentive (PLI) Scheme

Under the PLI scheme for electronics, India has achieved production worth ₹6.14 lakh crore and exports of ₹3.12 lakh crore.
This has led to the creation of over 128,000 direct jobs in the electronics sector, reinforcing India’s position as a global manufacturing powerhouse. T
he PLI scheme aims to provide competitive incentives to companies in the semiconductor and electronics manufacturing sectors.

Incentives for Semiconductor Manufacturing

The semiconductor programme includes fiscal support of up to 50% for setting up semiconductor and display fabrication units.
The government collaborates with states to create high-tech clusters with necessary infrastructure.
Additionally, fiscal support of 30% is available for capital expenditure in compound semiconductor units.

Design Linked Incentive Scheme

The Design Linked Incentive (DLI) Scheme offers incentives of up to 50% on eligible expenditures for semiconductor design companies.
This includes support for Integrated Circuits (ICs), chipsets, and System on Chips (SoCs).
The goal is to boost domestic capabilities in semiconductor design and innovation.

India Semiconductor Mission

The India Semiconductor Mission (ISM) will be established to drive long-term strategies for developing a sustainable semiconductor ecosystem. Led by global experts, ISM will act as the nodal agency for implementing semiconductor and display manufacturing schemes efficiently.

Strategic Importance of Semiconductors

In the current geopolitical landscape, semiconductors are vital for national security and economic stability. The development of a robust semiconductor ecosystem will enhance India’s self-reliance and integration into global supply chains.

Challenges in the Electronics Sector

Despite growth, India faces challenges such as low net value addition in electronics production, reliance on imports for critical components, and a lack of indigenous semiconductor foundries. These factors hinder the country’s ability to fully capitalise on its manufacturing potential.

Future Directions for India’s Semiconductor Industry

To advance in semiconductor manufacturing, India must focus on building comprehensive support across the chip-making supply chain, including design, testing, and packaging. Increasing fiscal support and leveraging public sector enterprises can facilitate the establishment of semiconductor foundries. Emphasising a collaborative approach within a trusted semiconductor ecosystem will be essential for India’s success in this domain.

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