MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY
(IPHW DIVISION)
NOTIFICATION
New Delhi, the 21st December, 2021
Subject : Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) /OSAT facilities in India
F. No. W-38/23/2021-IPHW.—1. Background
1.1. The electronics industry is the world’s largest and fastest growing industry with applications in all sectors of the economy. Semiconductors have been a key enabler in the advancement of electronics for the past 50 years and will continue to play an even greater role with the introduction of new applications including IoT, artificial intelligence, 5G, smart cars, smart factories, data centres, robotics, etc.
1.2. Semiconductor manufacturing is a complex and research-intensive sector, defined by rapid changes in technology which require significant and sustained investment. In the microelectronics industry, integrated circuits (ICs) and discrete semiconductor devices are produced in a wafer Fabrication facility, commonly known as a Fab. Semiconductors are at the heart of electronic products and constitute a significant part of the Bill of Materials (BOM).
1.3. Compound semiconductor market has witnessed rapid growth in the recent years. Increasing demand and adoption of emerging technologies in the semiconductor industry is one of the primary factors driving market growth. Moreover, rapidly increasing use of compound semiconductors in power semiconductors, radio frequency devices and LED applications is expected to drive the demand for the compound semiconductors even higher. Compound Semiconductors provide faster switching at high power with increased energy efficiency and suitable for high temperature applications.
1.4. Silicon Photonics has growing applications in high-speed internet, high-speed computing etc. with a global market of nearly USD 1 Billion (₹7,500 crore). It is forecast to grow to USD 3 billion (₹22,500 crore) by 2025 at a CAGR of nearly 23%. Rising demand for Silicon Photonics technology-based data centres is the major factor driving the growth of Silicon Photonics market. Similarly, Indian Microelectromechanical Systems (MEMS) market is poised to witness significant growth in the future on account of the thriving healthcare, automation, electric vehicles and consumer electronics industries.
1.5. Semiconductor packaging, otherwise known as Assembly, Testing, Marking and Packaging (ATMP) or Outsourced Semiconductor Assembly and Testing (OSAT) is an essential stage in the chip manufacturing process. ATMP is the next step in the semiconductor value chain after semiconductor fabrication. ATMP units are coupled with strong Fab linkages and building ATMP ecosystem will accelerate the government’s efforts to set up Semiconductor Fabs in India. ATMP capabilities will also improve availability of semiconductors in the country in the quest to become Atmanirbhar in this critical sector.
1.6. The vision of National Policy on Electronics 2019 (NPE 2019) is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) and create an enabling environment for the industry to compete globally. One of the main strategies of NPE 2019 is to facilitate setting up of semiconductor Fab facilities and its eco-system for design and fabrication of chips and chip components.
Objective: To attract investments for setting up Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fabs and Semiconductor ATMP / OSAT facilities in the country to strengthen the electronics manufacturing ecosystem and help establish a trusted electronics value chain in the areas of application of these fabrication and packaging technologies.
3. Eligibility and Financial Incentives from Government of India
3.1. Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab
| Description | Companies / Joint Ventures proposing to set up Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab in India for manufacturing High Frequency / High Power / Optoelectronics devices | |
| Technology | Wafer Size | Capacity |
| 150 / 200 mm or more | 500 or more Wafer Starts / Month (in 100 mm equivalent) |
|
| Operational Experience | The applicant Companies / Joint Ventures should have the following experience:
A. Own and operate a commercial Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab or Silicon Semiconductor Fab OR B. Own or possess licensed process technologies for the proposed Fab |
|
| Capital Investment Threshold |
Minimum Capital Investment of ₹100 crore (₹1 billion) for Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab | |
| Fiscal support from Government of India | 30% of Capital Expenditure | |
3.2. Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / Outsourced Semiconductor Assembly and Test (OSAT) Facility
| Companies / Joint Ventures proposing to set up Semiconductor Assembly, | |
| Description | Testing, Marking, and Packaging (ATMP) / Outsourced Semiconductor Assembly and Test (OSAT) Facility in India |
| The applicant Companies / Joint Ventures should have the following experience: | |
| A. Own and operate a commercial Semiconductor Packaging Unit | |
| Operational | OR |
| Experience | B. Own or possess licensed technologies for the proposed semiconductor packaging unit and demonstrate the roadmap to advanced packaging technologies through licensing or development |
| Capital | |
| Investment | Minimum Capital Investment of ₹50 crore (₹500 million) |
| Threshold | |
| Fiscal support from
Government of |
30% of Capital Expenditure |
| India |
4. Financial Support
4.1. Fiscal support: The scheme shall extend a fiscal support of 30% of the Capital Expenditure for setting up of Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) Fab and Semiconductor ATMP / OSAT facilities in India.
4.2. Additional financial support, if any, offered by the State Government or any of its agencies or local bodies may also be availed. However, an applicant under this Scheme will not avail incentive under the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) under the Semiconductor Fab, Compound Semiconductors Fab and ATMP category.
5. Demand Aggregation Support
Compound Semiconductors / Silicon Photonics / Sensors Fabs and ATMP / OSAT units set up in India will be supported through purchase preference in procurement of electronic products by the Government under the Public Procurement (Preference to Make in India) Order 2017.
6. Support for R&D, Skill Development and Training
Up to 2.5% of the outlay of the scheme shall be earmarked for meeting the R&D, skill development and training requirements for the development of compound semiconductors and ATMP ecosystem in India.
7. Capital Expenditure
“Capital Expenditure” for the purpose of the scheme shall include expenditure incurred on building, clean rooms, plant, machinery, equipment & associated utilities (including used / second hand / refurbished); transfer of technology (ToT) including cost of technology; and research & development (R&D). Details regarding the eligibility of capital expenditure shall be provided in the scheme guidelines.
8. Tenure of the Scheme
The scheme shall be open for applications initially for a period of Three Years starting from January One, Two Thousand and Twenty-Two (01/01/2022).
9. Governance Mechanism
9.1. Nodal Agency: The scheme will be implemented through a Nodal Agency.
9.2. Such nodal agency will be responsible for receipt of applications, carrying out financial and technical appraisal of the applications received under the scheme; implementing the scheme and carrying out other responsibilities as assigned by Ministry of Electronics and Information Technology from time to time. The functions and responsibilities of nodal agency will be elaborated in the Scheme Guidelines to be issued by Ministry of Electronics and Information Technology separately.
9.3. For carrying out activities related to implementation of the Scheme, nodal agency will inter-alia:
9.3.1. Receive the applications, issue acknowledgements, and verify eligibility of the applicants for support under the Scheme. Till such time that the Nodal Agency is established, Ministry of Electronics and Information Technology will receive the applications and carry out the further process.
9.3.2. Empanel agency(ies) or consultants as deemed necessary to carry out technical and financial appraisal of the projects as well as evaluate expertise of the applicants in these niche areas of Compound Semiconductors / Silicon Photonics (SiPh) / Sensors (including MEMS) and semiconductor packaging.
9.3.3. Examine claims eligible for disbursement of fiscal support and incentive under the scheme and disburse those as per eligibility.
9.3.4. Submit periodic reports to Ministry of Electronics and Information Technology regarding the progress and performance of the scheme.
9.4. Nodal Agency will submit the proposals that have been financially and technically appraised and found eligible to the Ministry of Electronics and Information Technology for taking further action by the competent authority for approval / rejection / modification of the applications.
10. Approval
10.1 The applications received under the scheme shall be appraised on an ongoing basis and implementation will continue as per the approvals accorded under the scheme.
10.2 Approval to the selected applicants will be accorded by the Competent Authority in Ministry of Electronics and Information Technology and communicated by the Nodal Agency to the applicant.
10.3 The Competent Authority for approving incentives for any selected applicant upto ₹100 crore will be Secretary, Ministry of Electronics and Information Technology. Approval of incentives above ₹100 crore for a selected applicant will be done by Minister of Electronics and Information Technology.
11. Disbursement Process
11.1 The incentive against the capital expenditure will be released after the approval of the application, subject to capital expenditure exceeding the threshold value and commencement of commercial production.
11.2 Ministry of Electronics and Information Technology shall make budgetary provisions for disbursal of fiscal support to approved projects under the scheme. The disbursement shall be done by the Nodal Agency based on approval conditions. Nodal Agency will submit budgetary requirement to Ministry of Electronics and Information Technology as consolidated amount on regular basis.
11.3 The detailed procedure for disbursal to applicants will be laid down in the Scheme Guidelines.
12. Impact Assessment
Mid-term appraisal of the scheme will be done after two years of its implementation or as per requirement to assess the impact of the scheme, off-take by the applicants and economy in terms of the stated objectives. Based on such impact assessment, decision will be taken to increase the tenure of the scheme and change its financial outlay with the approval of the Minister of Electronics and Information Technology.
13. Scheme Guidelines
The scheme guidelines will be issued by Ministry of Electronics and Information Technology (MeitY) separately with the approval of Minister of Electronics and Information Technology.
14. Amendment of Scheme and Guidelines: The scheme and its guidelines shall be reviewed and amended periodically or as per requirement with the approval of Minister of Electronics and Information Technology.
SAURABH GAUR, Jt. Secy.
