The Ministry of Electronics and Information Technology (MeitY) introduced the scheme for establishing Semiconductor Fabs in India in an attempt to attract big investments for setting up semiconductor wafer fabrication facilities within the country to boost the electronics manufacturing ecosystem.

This is in accordance with India's National Policy on Electronics (NPE) 2019, which aims to make the country a global hub for Electronics System Design and Manufacturing (ESDM) and help the industry compete globally. The financial assistance provided can cover up to 50 percent of the project's cost.

The support is prescribed for a period of six years according to the scheme's duration. The actual fiscal support outflow's tenure may be prolonged with the MeitY's agreement.

The application portal will open on January 1, 2022, and will remain open for 45 days. In addition, the government will provide infrastructure support under the “Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme for infrastructure development / Common Facility Centre subject to the proposal satisfying the EMC 2.0 framework requirements”, according to the government.

It was announced that the government will promote semiconductor fabs in India by giving them priority in electronic goods procurement under the Public Procurement (Preference to Make in India) Order 2017.

Additionally, up to 2.5 percent of the scheme's budget would be allocated to research and development (R&D), talent development, and training needs for the development of India's semiconductor ecosystem.

Given the increasing penetration of emerging technologies such as 5G, IoT, Artificial Intelligence, Robotics, Smart Mobility, Smart Manufacturing, and others, the global electronics market, which is now valued at roughly $ 2 trillion (150 lakh crore), is likely to rise dramatically.

“The biggest advantage that India has is the entire design ecosystem. We have around 24,000 design engineers working in India. Almost all the major economies are today giving close to 50 per cent capital incentive on setting up a semiconductor fab or a display fab. We will be giving practically similar incentives. But what we are offering in advance is a very clear 20-year roadmap where the focus is on generating that talent, nurturing that talent and making sure that as the industry grows. There are a sufficient number of very well trained engineers available for taking that journey forward. So, that is what will give us a bigger advantage”, according to Ashwini Vaishnaw, Minister for Railways, Communications, Electronics & Information Technology.

While the global semiconductor market was worth 33 lakh crore in 2020 and is predicted to grow to 75 lakh crore by 2030, the Indian semiconductor market was worth 1.13 lakh crore in 2020 and is expected to grow to 4.73 lakh crore by 2026. Wireless communications, consumer electronics, and automotive electronics are expected to dominate India's semiconductor market by 2030, with 24 percent, 23 percent, and 20 percent market share, respectively.