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Union Cabinet Approves a Uniform Incentive of 50 Percent of the Project Cost for Setting-Up Semiconductor Units

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The Union Cabinet approved a uniform incentive of 50 percent of the project cost for setting up semiconductor, display and compound semiconductor fabrication units.

According to the Ministry of Electronics and Information Technology, The 50 percent fiscal support to all three schemes was based on a unanimous recommendation by an advisory committee consisting of experts from around the world.

The three schemes had an incentive range of 30-50 percent before.

While incentives for setting up semiconductor fabrication were based on the size of the chip, for display fabrication and compound semiconductor fabs, the incentives were largely 30 percent of the total cost of the project.

Given the niche technology and nature of compound semiconductors and advanced packaging, the modified program shall also provide fiscal support of 50 percent of capital expenditure in pari-passu (equal footing) mode for setting up of compound semiconductors, silicon photonics, sensors and discrete semiconductors fabs.

Rajeev Chandrasekhar, Minister of State for Electronics and IT says, “The modifications in the scheme aim to harmonize the incentives for various categories.”

“The modifications in the semiconductor policy that were announced in December 2021 point to a strategy on the part of the government where we are harmonizing the incentive schemes under the various categories of semiconductor fab, display fab and compound semiconductor fabrication. By doing this, the semiconductor policy is extremely competitive and attracts investments across the spectrum - which is silicon, compound and fabs,” Chandrasekhar adds.

The government, however, decided that a uniform incentive should be given to all schemes to ensure the presence of players in all segments

When the government announced the scheme in December last year, advanced nodes such as 28 nanometre (nm) stood to attract higher incentives than others such as 65 nm.

Chandrasekhar says, “The government, however, decided that a uniform incentive should be given to all schemes to ensure the presence of players in all segments.”

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