MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY
(IPHW DIVISION)
NOTIFICATION
New Delhi, the 21st December, 2021
Subject: Scheme for setting up of Display Fabs in India
F. No. W-38/6/2021-IPHW.—
1. Background
1.1 Electronics permeates all sectors of the economy and the electronics industry has cross-cutting economic and strategic importance. Currently valued at around USD 2 Trillion (2150 lakh crore), the global electronics market is expected to grow significantly given the increasing penetration of emerging technologies including 5G, IoT, Artificial Intelligence, Robotics, Smart Mobility, Smart Manufacturing, etc.
1.2 The domestic production of electronic goods has increased substantially from 21.9 lakh crore in 2014-15 to 24.97 lakh crore in 2020-21 (industry estimates) at a Compound Annual Growth Rate (CAGR) of 17%. India’s share in global electronics manufacturing has grown from 1.3% in 2012 to 3.6% in 2019, as per industry estimates.
1.3 Domestic electronics manufacturing has increased substantially over the last few years and is steadily moving from the Semi Knocked Down (SKD) to the Completely Knocked Down (CKD) stage of manufacturing. However, domestic value addition is estimated to be in the range of 10% – 30% only, and growth in manufacturing so far has primarily been on account of final assembly using imported components, sub-assemblies / parts, etc. This is due to the lack of a robust semiconductors and display manufacturing ecosystem in the country.
1.4 Displays constitute a significant portion of the total Bill of Materials (BoM) of electronic products.
For instance, displays account for over 25% of the BoM in case of smartphones and over 50% in case of LCD / LED TVs. As per estimates, India’s display panel market is estimated to be ~USD 7 Billion (2 52.5 thousand crore) and is expected to grow to ~USD 15 Billion (21.13 lakh crore) by 2025. Current requirements are met exclusively through imports.
1.5 As per estimates from ELCINA, the electronic components manufacturing sector suffers from a disability of around 10% due to the lack of adequate infrastructure, domestic supply chain and logistics; high cost of finance; inadequate availability of quality power; limited design capabilities and focus on R&D by the industry; and inadequacies in skill development. Given this and the capital-intensive nature of display manufacturing, there is need to incentivize the industry to set up a Display Fab facility in India.
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 display fabrication facilities.
2. Objective: To attract large investments for setting up display fabrication facilities in the country to strengthen the electronics manufacturing ecosystem.
3. Eligibility and Fiscal support from Government of India
3.1 Display Fab
| Description | Companies / Consortia / Joint Ventures proposing to set up a Display Fabrication Unit (Fab) in India for manufacturing TFT LCD or AMOLED based display panels | |
| Technology | Generation 8 or above for TFT LCD
OR Generation 6 or above for AMOLED |
|
| Capacity | 60,000 Panels / month or more for TFT LCD 30,000 Panels / month or more for AMOLED | |
| Operational Experience | The applicant Companies / Consortia / Joint Ventures should have the following experience:
A. Own and operate a commercial Display Fab facility with TFT LCD Technology of Generation 6 or above OR B. Own or possess licensed technologies for Generation 8 of TFT LCD Technology or Generation 6 of AMOLED Technology; and demonstrate the roadmap to advanced technologies through licensing or development |
|
| Capital Investment Threshold |
Minimum Capital Investment of ₹10,000 crore (₹100 billion) | |
| Revenue Threshold |
Minimum Revenue of ₹7,500 crore (₹75 billion) (including Group Companies) in any of the three financial years preceding the year of submission | |
| Fiscal support from Government of India | Fiscal support | |
| Percentage of Project Cost |
Maximum Support (₹ crore) |
|
| Up to 50% | 12,000 | |
4. Financial Support
4.1 Fiscal support: The scheme will extend fiscal support for Display Fabs subject to the ceiling mentioned in Para 3.
4.2 Additional financial support, if any, offered by the State Government or any of its agencies or local bodies may also be availed.
5. Infrastructure Support
5.1 Support for development of Infrastructure / Common Facility Centres: Government of India may extend the benefits of Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme for development of infrastructure / Common Facility Centre subject to the proposal satisfying the EMC 2.0 framework requirements.
6. Demand Aggregation Support: Display Fab(s) 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.
7. 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 display ecosystem in India.
8. Tenure of the Scheme: Support under the scheme shall be provided for a period of six years. The tenure of the actual fiscal support outflow may be extended based on the approval of the Minister of Electronics and Information Technology.
9. Financial Appraisal of the Scheme: The scheme shall be appraised by the Expenditure Finance Committee (EFC) led by Secretary, Department of Expenditure.
9.1 Expenditure Finance Committee shall determine the structure and quantum of fiscal support to be provided under the scheme in consultation with Ministry of Electronics and Information Technology and the Nodal Agency.
9.2 In case of fiscal support being provided as equity either in part or in full, Government of India’s share will not exceed 49% of total project equity.
10. Application Procedure: Applications under the scheme shall be invited for a period of forty-five days initially from 01.01.2022 which may be extended with the approval of Minister of Electronics and Information Technology. The scheme may also be reopened for applications anytime during its tenure with the approval of Minister of Electronics and Information Technology.
11. Number of beneficiaries: Approval shall be granted to not more than two (2) applicants under the scheme. In case of receipt of a single application also under the scheme owing to the nature of the activity and availability of limited companies worldwide which are into display fab, the process of selection and approval of the applicant company / consortia will be followed. This is especially important in view of the economic realities and requirement of having a display fab in the country. Having domestic capabilities in display manufacturing is an imperative for industrial growth, digital sovereignty, and technological leadership.
12. Governance Mechanism
12.1 Nodal Agency: The scheme will be implemented through a nodal agency (India Semiconductor Mission). Such nodal agency will be responsible for carrying out technical appraisal and financial appraisal of the applications received under the scheme; recommending selection of applicants; and carrying out other responsibilities as assigned by the Ministry of Electronics and Information Technology (MeitY) from time to time. The functions and responsibilities of nodal agency shall be elaborated in the scheme guidelines to be issued by Ministry of Electronics and Information Technology separately.
12.2 For carrying out activities related to the implementation of the scheme, nodal agency would inter-alia:
12.2.1 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.
12.2.2 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.
12.2.3 Negotiate with the applicant(s) to propose the appropriate technology mix, applications, generation, capacity, etc., and structure and quantum of fiscal support under the scheme.
12.2.4 Examine claims eligible for disbursement of fiscal support under the scheme and disburse the fiscal support as per eligibility.
12.2.5 Submit periodic reports to Ministry of Electronics and Information Technology regarding the progress and performance of the scheme.
13. Approval Process
13.1 QCBS Evaluation by Nodal Agency: The applicant(s) will be evaluated by the Nodal Agency based on Quality and Cost Based Selection (QCBS) criteria. This will include technical parameters such as process technologies, project implementation capacity, operation capability, etc. This will also include financial parameters such as fiscal support sought from the government. The QCBS evaluation criteria shall be decided by Ministry of Electronics and Information Technology in consultation with Nodal Agency and approved by the Minister of Electronics and Information Technology.
13.2 Negotiations by Nodal Agency: After the process of QCBS evaluation, the Nodal Agency will hold negotiations with the selected applicant(s) under the scheme to propose the appropriate technology mix, applications, generation, capacity, etc., and structure and quantum of fiscal support under the scheme
13.3 The applicant(s) selected after negotiations shall be proposed by the Nodal Agency to Ministry of Electronics and Information Technology.
13.4 Approval of Applicant(s) by Union Cabinet: The applicant(s) as recommended by the Nodal Agency will be placed by the Ministry of Electronics and Information Technology for approval by the Union Cabinet. After the approval is accorded by the Union Cabinet, these will be forwarded by the Ministry of Electronics and Information Technology to the Nodal Agency for communication to the applicant(s).
14. Disbursement Process
14.1 Ministry of Electronics and Information Technology will make budgetary provisions for disbursal of fiscal support to approved applicant(s) under the scheme. The disbursement of the fiscal support will 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.
14.2 The fiscal support will be released to the applicant(s) by the Nodal Agency on pari-passu basis.
14.3 The detailed procedure for disbursal of fiscal support to the approved applicant(s) will be laid down in the Scheme Guidelines.
15. Impact Assessment: Mid-term appraisal of the scheme will be done after three years of its implementation or as per requirement to assess the impact of the scheme, off-take by the approved 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 Minister of Electronics and Information Technology.
16. Scheme Guidelines: The scheme guidelines shall be issued by Ministry of Electronics and Information Technology (MeitY) separately with the approval of Minister of Electronics and Information Technology.
17. 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.
