According to top authorities, the government would shortly issue a request for proposal (RFP) document requesting formal proposals from firms interested in establishing semiconductor factories. Officials claimed that many firms expressed interest in establishing such fabs (fabrication units) early this year and that the government would decide on the number of subsidies only after receiving detailed bids.
A senior official directly working on the case said, “We have to take final approvals for issuing the RFP… It should happen soon. How much support can be given to the companies will be decided after we receive the applications and after discussing with stakeholders on their support requirements.”
The government would be “careful” before issuing permissions because setting up fabs is costly and the subsidy is large, according to the official. “We have to see whether the party is genuine, how much money they will be bringing, etc.”
Nearly 20 firms are thought to have expressed interest in investing in the industry after the government published an expression of interest earlier this year.
N Chandrasekharan, chairman of Tata Sons, has discussed the salt-to-software conglomerate’s ambitions to join the semiconductor space in order to minimize reliance on Chinese imports. Due to the global scarcity of chips caused by the Covid-19 epidemic, several firms have expanded their operations to other areas, crippling numerous sectors such as autos and electronics.
The Ministry of Electronics and Information Technology (MeitY) hasn’t said how much money it will provide firms as an incentive. The government, on the other hand, is thought to have put aside $1 billion for a fab, which would require a total expenditure of $2 billion to $5 billion or more.
The government’s next areas of concentration, according to the source, would be 5G, data centers, and semiconductors. The government has been successful in recruiting firms to set up mobile phone manufacturing factories through incentive schemes in recent years. The government is willing to create both classic and newer fabs, such as Gallium Nitride semiconductor fabs, which are less expensive to construct.
The official added by saying, “We are open to both domains, both can come at the same time, depending on the interest that we get from the players.” According to the source, all of the leading fab producers have expressed an interest in participating.
The government granted a capital expenditure subsidy of up to 40% for the establishment of fabs the last time around, but none of the authorized ideas took off. According to Arun Mampazhy, a semiconductor fab technology specialist, the industry is anticipating a better deal this time.
“India has been too slow in finalizing the policy. Any further delay from India’s side may lead to losing one of the few interesting foundries also. Big shots like TSMC or Samsung or Intel are likely to prefer already proven countries and so it is important for India not to lose offers it already has,” he included.