What may drive Intel to set up chip plant in India

US-based semiconductor giant Intel is reported to be planning a new manufacturing facility in India, in the backdrop of the Centre recently rolling out incentives for the chip industry.

“Congrats to @GoI_MeitY @AshwiniVaishnaw @Rajeev_GoI for Semiconductor design & manufacturing incentives for India as hub for electronics & semiconductors. Glad to see a plan laid out for all aspects of the supply chain: talent, design, manufacturing, test, packaging & logistics,” tweeted Randhir Thakur, SVP and President of Intel Foundry Services. Thakur’s Twitter account is not a verified one.

The Minister for IT and Electronics, Ashwini Vaishnaw, responded to the tweet with “Intel — welcome to India.”

Semiconductor scheme

Last week, the Union Cabinet cleared a proposal to encourage research and innovation in the semiconductor sector, with a fillip to manufacturing, under the Aatmanirbhar Bharat scheme. The ₹76,000-crore policy aims to boost the country’s semiconductor and display manufacturing segments.

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“The vision of National Policy on Electronics 2019 (NPE 2019) is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) and create an enabling environment for the industry to compete globally,” said a government gazette dated December 21, 2021. “One of the main strategies of NPE 2019 is to facilitate setting up of semiconductor wafer fabrication facilities and its eco-system for design and fabrication of chip components.”

Under the scheme, India will roll out a highly competitive incentive package to global companies operating in the semiconductors, display manufacturing and design space. The Centre hopes to woo companies that make silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensors fabs, semiconductor packaging and semiconductor design.

Finance, infrastructure support

The Centre plans to offer the eligible firms support in terms of finances, infrastructure and demand aggregation, apart from R&D, skill development and training. The fiscal support will be to the extent of 50% of the project cost. The Union government will also work closely with the State governments to develop high-tech clusters. Here, it will facilitate the availability of land, semiconductor grade water, research, logistics and power.

The Ministry of Electronics and IT (MeitY) may also look at joint ventures with semiconductor laboratories to modernise existing fab facilities.

The semiconductor scheme will be implemented through India Semiconductor Mission, a nodal agency, said the gazette. “Such a nodal agency will be responsible for carrying out technical appraisal and financial appraisal of the applications received under the scheme; recommending selection of applicants; and carrying out other responsibilities as assigned by the MeitY from time to time,” it added.