semicon-2-0-to-place-india-among-top-chip-producers-it-secy

The process of incentivising advanced semiconductor chip making against equity is under consideration and is expected to drive the large-scale investment required for the development of the chipmaking industry, a senior government official has said.

 

The Government of India, which has allocated a budget of Rs 1.27 lakh crore, will provide further incentives to boost the country’s chipmaking facilities.

 

Electronics and IT Secretary S Krishnan said advanced chip design may need thousands of crores in investments.

 

In an interview, Krishnan said, “We intend to provide more funding. Otherwise, under the design-linked incentive scheme, you get only about Rs 15 crore. Now, to design high-end chips, you need Rs 1,000 crore or more.”

 

He said the government cannot alone produce and fund semiconductors, which is why "we have this combination where you get the investment from a venture capitalist or somebody who believes that you will be able to bring out this chip, and we will co-invest,” he said.

 

The union government on July 15 approved Rs 1.27 lakh crore (approximately $14 billion) under the Semicon 2.0 programme to accelerate semiconductor design and manufacturing capabilities.

 

Also read: To strengthen India's chip ecosystem, Semicon 2.0 approved

 

The initiative will remain in effect for the next six years starting from the fiscal year 2027.

 

The government is yet to announce a cap for investment in advanced chip design by Indian firms. It will, however, provide incentives to Indian chip companies in the form of grants or equity or link it to royalty-based payments.

 

The idea is simple, in the words of Krishnan, as he noted that co-investment is two-fold. One, that we increase the overall funding which is available, and second, that the government cannot do selection since it has no capacity.

 

“When whitelisted venture capitalist funds invest, we will co-invest,” Krishnan said.

 

Krishnan said the government has already identified 105 start-ups under the Semicon 2.0 mission who are developing chips in India. The focus of Semicon is on deepening the design ecosystem.

 

“During Semicon 2.0, we should be capable of designing our own advanced chips. Whether we will be able to manufacture it in the country, we don’t know. I don’t think we will get there yet. We are not looking at that market yet,” he added.