The Interim Budget 2024's decision by the Indian government to provide the largest subsidy for semiconductor and display manufacturing sends a clear message. There are a number of international firms are contemplating long-term investments in India, therefore the Budget will be monitored carefully by important stakeholders worldwide. Despite the budget's encouraging allotment, the industry remains uneasy.
"Three main concerns have been raised by players in the international semiconductor ecosystem in the last few days following India's budget 2024: first, the level of detail in the budget allocation for each type of semiconductor; second, a plan for budget allocation beyond 2024, given that all semiconductor projects span several years. Finally, is there a plan for subsidies beyond the original $10 billion allotment?" says Danish Faruqui, CEO of Fab Economics, a specialized semiconductor services company with headquarters in the US.
Chip players are highly curious about the detailed allocation of Rs 6,903 crore for Si-based CMOS Fab, Compound Semiconductor Fab, Display Fab, Assembly Test and Packaging, Design Linked Incentives, and Semiconductor R&D, Faruqui informed BT. He continues, "Participants who are interested in entering the Indian market are divided into the six aforementioned categories, and they all want to know what their share of the market will be in 2024 when it comes to semiconductor projects."
Second, a lot of players have questioned the Government of India's plan for such a priority and allocation after 2024, as well as whether it will continue to support the development of the domestic semiconductor ecosystem with the same vigor. This clarity is important for foreign players who may commit to multibillion dollar projects in India that take several years to break even, as such a long-term commitment necessitates a clear path forward, one that includes political stability.
Finally, given that India has one of the highest percentages of CAPEX subsidy in the world, many international players are concerned that India's $10 billion allocation for developing Si-based CMOS Fab, Compound Semiconductor Fab, Display Fab, Assembly Test and Packaging unit ecosystem in India via ISM will be exhausted in the first few proposals. Since scaling is a must for survival in the semiconductor business, the world would like to know if India has plans in place to provide the next tranch of allocation beyond the first $10 billion to scale the Indian semiconductor ecosystem.
In response, Rajeev Chandrasekhar and Minister Ashwini Vaishnaw have both said that the Rs 76,000 crore being allocated for semiconductor and display fabs is only the beginning. If more incentives are required in the future, India is willing to provide them.
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