MeitY To Seek Additional Funds From Finance Ministry for Semiconductor Mission

The Ministry of Electronics and Information Technology (MeitY) will knock on the doors of the finance ministry and seek more funds for its semiconductor mission. 

As per The Hindu businessline, MeitY has already committed funds to the tune of INR 70,000 Cr (92%) out of the scheme’s total outlay of INR 76,000 Cr. “We have to go back to the Ministry of Finance and ask for more money,” MeitY Secretary S Krishnan was quoted as saying. 

Krishnan added that the ministry is working on a follow-up scheme to complement the scheme for promotion of manufacturing of electronic components and semiconductors (SPECS), which ended in March 2024. 

Citing the rationale for a new scheme, Krishnan said that while “some” manufacturers were covered under SPECS, there is a need for a follow-on scheme to foster smaller players

“While one fab of Tatas is coming up, we need more fabs and all the other stakeholders like supplies and equipment manufacturers. Many of those are not large companies but small. There are nearly 300 vendors who will be required to be there in close proximity. We will need to support all of that ecosystem, and that is what we intend to do,” he added. 

On the strategic importance of the mission, Krishnan said that there is a global need for diversification of the semiconductor supply chain, adding that the Indian government is keen on doing so. He also said that it is “very important” to have a critical ecosystem in place to foster the homegrown semiconductor industry. 

Krishnan said India currently exports electronics goods worth about $110 Bn (INR 9.02 Lakh Cr) and attributed this to factors such as affordable labour and simple product assembling. 

In the same breath, he cautioned, “While this gives lots of employment, the risk is that if we do not deepen the value chain in India, it may not stay very long in India and move to another country that offers cheaper labour”.

The MeitY secretary said that the Centre is “very seriously” exploring the space of component manufacturing. He added that the union as well as the state governments will have to work together on this aspect to make India a semiconductor hub. 

Noting that the Centre and the states are together bearing nearly 75% of the cost of operationalising a semiconductor unit through various sops, Krishnan said it is important that the authorities have an assurance of success. 

“We are as interested in the success of the project as the original investors themselves. Governments have more taxpayers money at stake in this programme. That is the level of importance the government is giving to the semiconductor programme,” he said. “What India is funding is significantly higher than what is offered by other countries.” 

The comments come at a time when both domestic and global semiconductor players are making a beeline for India to capitalise on the subsidies offered by the government. India has received 18 proposals for semiconductor projects, including four for semiconductor fabs and thirteen for compound semiconductor fabs and ATMP (assembly, testing, marking, and packaging) facilities. 

The applicants include the likes of Tata Electronics, Micron Technology, CG Power, among others. While  

While Tata Semiconductor Assembly and Test (TSAT) has earmarked INR 27,000 Cr to set up a unit in Assam’s Morigaon for advanced semiconductor packaging technologies, US-based Micron is also building an ATMP facility in Sanand, Gujarat at estimated cost of INR 22,516 Cr.

CG Power and Renesas are establishing a semiconductor unit in Sanand to manufacture specialised chips with a planned investment of INR 7,600 Cr.

At the heart of all this is the growing demand for chips globally amid a GenAI boom. As per Inc42 report, the homegrown semiconductor space is expected to reach a market size of $150 Bn by 2030.