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 Context

• The Union Cabinet approved a scheme to boost semiconductor and display manufacturing in the country, taking the total amount of incentives announced for the electronics sector to Rs 2.3 lakh crore.

About

• The comprehensive programme for the “development of sustainable semiconductor and display ecosystem in the country” is aimed at making India a global hub of electronic system design and manufacturing.
• The scheme would provide fiscal support of up to 50% of the project cost for setting up semiconductor and display fabrication units.
• The Union government will work with the States to set up high-tech clusters with the required infrastructure such as land and semiconductor-grade water.
• In order to drive the long-term strategies for sustainable semiconductors and display ecosystem, a specialised and independent ‘India Semiconductor Mission’ will be set up.
• It will act as the nodal agency for efficient and smooth implementation of the schemes on semiconductors and display ecosystem.
• The “chips to start-ups” programme would develop 85,000 well-trained engineers.
• Semiconductor designers would be given the opportunity to begin start-ups.
• The government would bear 50% of the expense under the design-linked incentive scheme.

Semiconductors in India 

• ‌India imports 100% of its semiconductorswhile also enjoying the distinct advantage as a leading global semiconductor chip designer.
• ‌There have been challenges in setting up of Semiconductor Wafer Fabrication (FAB) units in India. 
• ‌India is still not unto the par in terms of the basic infrastructure needed.
• ‌There is also constant price pressure from other global players, particularly China.

Prospects

• ‌With the newly heralded era of Internet of Things (IoT) dictating that the new generation of interconnected devices be capable of smart-computing, Indian semiconductor industry is set for a stable upsurge with bright prospects provided India's generic obstacles like redtape-ism, fund crunch and infrastructural deficits are adequately addressed.
• ‌In 2016, the government allows 100% FDI in the ESDM sectorthrough an automatic route to attract investments including from Original Equipment Manufacturers (OEMs) and Integrated Device Manufacturers (IDMs).
• ‌The Department of Electronics and Information Technology (DeitY) has established an Electronics Development Fund (EDF) managed by Canara Bank to provide risk capital and to attract venture funds, angel funds and seed funds for incubating R&D and fostering the innovative environment in the sector.
• ‌Some of the initiatives outlined in the National Electronics policy and the National Telecom policy are already in the process of implementation, such as Preferential Market Access (PMS), Electronics Manufacturing Clusters (EMC) and Modified Special Incentive Package Scheme (M-SIPS). 
• ‌With the implementation of fabrication capabilities in India, the country could achieve a degree of self-sufficiency in the sector of semiconductors.

Significance of programme for the “development of sustainable semiconductor and display ecosystem in the country”

• The entire programme would lead to 35,000 high-quality direct jobs and indirect employment for 1 lakh persons.
• The scheme is expected to attract investment of Rs 67 lakh crore and lead to production worth Rs 9.5 lakh crore.

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