In December 2021, the Indian government introduced the Production Linked Incentive (PLI) scheme for semiconductors and display FAB ecosystem, allocating over Rs 76,000 crore for the initiative. This scheme was revised in September 2022 to attract greater participation from global investors through enhanced incentives.
Tamil Nadu is actively seeking investments, particularly following Foxconn’s withdrawal from a US$19.5 billion semiconductor joint venture with Vedanta. Foxconn has expressed its intention to apply for incentives offered by India under its semiconductor manufacturing policy, but Tamil Nadu aims for substantial investments from companies like Foxconn.
India has gained attention from multinational corporations as they seek to diversify their supply chains and establish alternative manufacturing bases to mitigate risks, particularly in light of disruptions caused by the Covid-19 pandemic.
Recognizing that semiconductor fabrication is a water-intensive activity, Dr. Rajaa assures investors that water supply will not be a concern, as the state will ensure sufficient availability to facilitate smooth operations.
The automotive industry, heavily reliant on semiconductors, experienced significant disruptions during the pandemic, resulting in annual production losses of several billion dollars in India. The industry heavily relied on semiconductor supplies from Taiwan and South Korea, but the pandemic exacerbated the demand-supply imbalance and disrupted global supply chains. Consequently, countries are now striving to establish their own semiconductor chip manufacturing capabilities to achieve self-sufficiency.
During Prime Minister Narendra Modi‘s recent visit to the US, key players such as Micron, Applied Materials, and Lam Research announced significant contributions to the expansion of India’s semiconductor ecosystem, marking a significant milestone according to Union Minister of State for Electronics and Information Technology, Rajeev Chandrasekhar.