The Indian government has in the past shown interest in getting major global tech companies to set up their semiconductor fabrication facilities in India. But so far, the move has been largely unsuccessful. Now, the government has invited these particular companies again and is open to giving them subsidies and other advantages. This move from the government comes after there was a shortage of semiconductor chips reported by the Indian smartphone manufacturers. If companies agree and move their production facilities of semiconductor fabrication to India, it would help the ‘Make in India’ initiative of the government hugely. Adding to that, it would also benefit the Indian smartphone manufacturer since they will be able to get the chips for a much cheaper cost — more details on the story ahead.
PLI Scheme of Government Might Attract Companies to Come to India
The Indian government introduced a Production-linked Incentive (PLI) scheme to give companies incentives on their incremental sales who manufacture their products in India. This is what will be different this time, along with multiple other things for foreign companies.
It is worthy to note that the last time the government invited foreign semiconductor companies to India for manufacturing locally, it offered the companies 40% subsidies. Even after this, the companies didn’t come to India.
But this around, multiple thins are different. First is the above mentioned PLI scheme, but adding to that, the production of electronics has more than doubled in the last few years, which promises a high demand for semiconductor chips.
As per a report from ET Telecom, the government is all ready to sit down with the companies which run semiconductor fabs to understand what they require and how it would help them to grow in the country. For achieving the government’s dream of setting up $400 billion worth of electronics manufacturing by 2025 in the country, this move needs to go through.
It would ensure that no Indian company in the future faces any shortage in semiconductor chipsets. Not only this, but it would also put India in a position to be able to export semiconductor chipsets to other countries.
For those who don’t understand, semiconductor fabs are those facilities which are used to manufacture integrated circuits. These type of facilities and factories require a ton of resources such as power and water and that too in an ample quantity without any interference or stoppage. They require billions of dollars to set up. If the Indian government really goes out and understands the pain points of these companies and help them with it, it would put the country in an excellent position in terms with ‘Make in India’ initiative.
