Context: The Union Cabinet on Wednesday approved a Rs76,000 crore incentive plan to woo semiconductor fabricators and display manufacturers, doubling down on the Centre's push to make India a global electronics production hub.

• An ambitious project to establish a complete ecosystem of semiconductors and display manufacturing has been sanctioned, Union Minister Anurag Thakur said at a press briefing today, adding Rs 76,000 crore will be spent on this project in 6 years. 

Need

• In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure.
• The supply has been disrupted as a result of the COVID-19 pandemic, which forced many production centres to close intermittently.

Key Points

• Under this, Incentives have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensors fabs, semiconductor packaging and semiconductor design.
• The government is looking at least two greenfield semiconductor fabs and two display fabs in the country, while at least 15 units of Compound Semiconductors and Semiconductor Packaging are expected to be established with government support under this scheme.
• Under Design Linked Incentive (DLI) scheme, support will be provided to 100 domestic companies of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.
• The DLI scheme will offer incentive of up to 50 per cent of eligible expenditure and product deployment linked incentive of 6-4 per cent on net sales for five years.
• An independent 'India Semiconductor Mission (ISM)' will be set up to drive the long-term strategies for developing a sustainable semiconductors and display ecosystem in the country.
• The new mission will be led by global experts in semiconductor and display industry, and will act as the nodal agency for efficient and smooth implementation of the scheme.
• India is looking to push electronics manufacturing to USD 300 billion in coming six years from USD 75 billion now, and semiconductor chips are a crucial part of that ecosystem.
• The scheme charts out a plan for skilling and training of 85,000 high-quality engineers, and works out a roadmap for next 20 years.

Key Importance of Semiconductor Scheme

• It aim to boost semiconductor and display manufacturing in the country in an bid to position India as a global hub for hi-tech production, and attract large chip makers.
• It would contribute significantly towards achieving $5 trillion dollar economy and $5 trillion GDP (gross domestic product) by 2025.
• The programme will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design
• The move would further India's ambitions to be self-reliant in electronics manufacturing, bring massive investments and result in 35,000 specialised jobs apart from indirect employment for one lakh people.
• The semiconductor scheme also comes at a time when the world is witnessing a severe crunch of semiconductors, a key component used in cars to electronic devices.