Indian Semiconductor Mission: Centre invites more companies to set up units

The idea behind inviting these firms to set up plants in India was to ensure manufacturing of chips began on time, said an official

In a bid to make the Indian Semiconductor Mission a success, the Centre is trying to lure companies in peripheral sectors for semiconductor manufacturing to set up shop in India, a report by the Economic Times said.

The government officials are meeting with representatives of industries such as ultra-pure copper, aluminium, water and gases, and others to explore their needs for establishing units near the proposed semiconductor manufacturing units, sources told the ET.

Representatives from these companies first visited the proposed semiconductor unit sites in Gujarat, Karnataka, and Tamil Nadu in February, according to a senior official from the Ministry of Electronics and Information Technology (MeitY).

Executives from several of these corporations returned to these sites last month, escorted by central and state government officials who took notes on some of their concerns, one of the officials said.

“These industries will need to be set up in proximity to the proposed semiconductor units,” the official said, adding, “Some of these raw materials cannot be transported over long distances due to fears of impurities getting in. We are trying to understand the exact requirements of these industries.”

The entire process of semiconductor manufacturing involves around 1,200 distinct types of raw materials, said the official.

Another government official said that the objective behind inviting these firms to set up plants in India rather than relying on imports was to ensure chip manufacture began on time and would be less affected by any disruptions in global supply chains.

“There are some raw materials such as some rare earth minerals for which we have no option but to depend on imports. For others, which can be manufactured domestically, we want a complete ecosystem,” the official told ET.

In December 2021, the Centre launched a $10 billion (approximately Rs 76,000 crore) package to stimulate semiconductor production in India.

The central government plans to grant incentives totaling 50 per cent of the entire cost of the project under the scheme announced in 2021.

The governments of the states where the units will be placed are providing additional incentives, bringing the total value of subsidies and incentives to around 70-75 per cent of the overall project cost.

So far, the Centre has received three proposals for chip production, including one from the International Semiconductor Consortium (ISMC) managed by Abu Dhabi-based Next Orbit Ventures. The other two applicants are Singapore-based IGSS Ventures and the Vedanta-Foxconn consortium.