India launches semiconductor incentive plan with an estimated investment of at least $25 billion

On September 22, Rajeev Chandrasekhar, deputy minister of information technology, announced on Wednesday that the Indian government plans to increase support for the new semiconductor and display equipment manufacturing industry, and is expected to strive for a total investment of at least $25 billion. A few hours before he announced the above news, the Indian government increased financial support for new semiconductor facilities to 50% of the project cost and said it would remove the maximum cap on investment allowed to incentivize local manufacturing of displays.

Prime Minister Narendra Modi’s government is seeking to attract more big-ticket investments under a $10 billion incentive package for chip and display production aimed at making India a key player in global supply chains.

The Indian government had previously agreed to cover 30% to 50% of the cost of setting up new display and chip plants, but on Wednesday it announced it would also cover 50% of the cost of setting up semiconductor packaging facilities.

Chandrasekhar said the government was in talks with many global companies about investing in India's chip industry, but did not name any companies.

“These conversations are taking place in the backdrop of multiple incentive packages and schemes being announced in different countries. We have a good track record in developing the electronics sector and we have also met the basic infrastructure requirements to set up manufacturing,” he added.

Last week, oil and metals conglomerate Vedanta and Foxconn signed a deal with the Indian state of Gujarat to invest $19.5 billion in setting up semiconductor and display manufacturing plants in the western state.

Vedanta is the third company to announce plans to set up a chip factory in India after international consortium ISMC and Singapore's IGSS Ventures, which have previously set up factories in the southern Indian states of Karnataka and Tamil Nadu respectively.