High time India's Semiconductor Mission got a reboot

Unlike PLI schemes, the incentives for semiconductor schemes are not linked to the incremental production targets achieved by winning bidders

On December 15, 2021 when the Narendra Modi-lead Union Cabinet approved incentive schemes for display fabs, semiconductor fabs, chip packaging, and design with an initial overlay of Rs 76,000 crore, the nodal agency setup for efficient and smooth implementation of the schemes was named India Semiconductor Mission (ISM).

Unlike the various Production Linked Incentive (PLI) schemes that the Union government has introduced, the incentives for semiconductor schemes are not linked to the initial or incremental production targets achieved by the winning bidders.

The policy says that the Centre “shall extend fiscal support of up to 50% of project cost on pari-passu basis to applicants who are found eligible and have the technology as well as capacity to execute such highly capital intensive and resource incentive projects”.

The policy documents also state requirements such as production grade license for the particular technology node that the company is planning to build the semiconductor chip fabrication facility or fabs as they are popularly known.

Though not detailed in the policy documents available on the ISM website, pari-passu means “on an equal footing”. In other words, the company or consortium whose application is approved is expected to put in its part, the Centre and the state governments are expected to put in their promised part of the fiscal and other support, and the company will build the fabrication facilities.

Clearly the nodal agency ISM needed both a team and leadership with vast experience in semiconductor industry in general and manufacturing in particular. However, more than one year after the formation of the body, the CEO of ISM is a Joint Secretary from the Ministry of Electronics and Information Technology (MEITY) who is probably there on a temporary basis. The rest of the team too cannot boast of much semiconductor industry experience, and even a 20-member advisory committee formed has only about a quarter or the members related to semiconductor industry — and none of them are likely to be Indian citizens.

No wonder then that MEITY has not been able to deliver on the promises that its own Minister Ashwini Vaishnaw and Minister of State Rajeev Chandrashekhar has been making.

On February 24, various media had reported Vaishnaw as saying, “The government will undertake a detailed evaluation of applications it has received in response to the mega semiconductor scheme and expects to complete the entire process and sign agreements with companies in next 8-10 months”. Even the 10-month timeline ended in December.

On October 12, Deccan Herald quoted Chandrashekhar as saying, “The government is likely to start approving proposals to set up electronic chip and display manufacturing plants in the country in next 30-60 days”. The longer timeline of 60 days passed by, and nothing happened.

Note that out of the various schemes, the ones for semiconductor fabs and display fabs were closed for applications on February 15, and the short application period was possibly due to the fact that MEITY had earlier opened an Expression of Interest (EOI) for those preparing to apply.

MEITY and ISM had received three applications for silicon fabs and two for display fabs, and the minister said that “After this first tranche gets utilised, we definitely will go for more”.

While we still don't have the yes or no decisions on the first-round applications, a recent development may warrant some action from MEITY soon. Taiwan-based media reported last week that Powerchip Semiconductor Manufacturing Corp (PSMC), world’s seventh-largest contract chip manufacturer by revenue, has expressed willingness to partner with the Government of India or with Indian companies to help India build semiconductor fabs.

Curiously, MEITY has so far not given any confirmation of the same. It is quite likely that the person or the team from the Indian side who led the talks with PSMC and eventually got them to agree to helping with setting up fabs is not directly related to MEITY.

If that is indeed the case, it is high time that the Prime Minister or his office gives serious thought to overhauling the leadership and team at India Semiconductor Mission.

As per a recent press release, Rs 13 crore has already been released to ISM, but the body has not yet been able to take decisions on the three applications for silicon fabs, two for display fabs or even the ones which are of relatively lesser investment value like the compound semiconductor fabs, chip packaging and chip design, much less actually get anything to move on the ground.

If PSMC is about to finalise an Indian business partner who is yet to apply for incentives, they will need the scheme to be reopened, which is expected after the first-round decisions are made. Whether before, after, or along with that, but at the earliest, ISM needs a reboot.

Arun Mampazhy (Twitter: @nano_arun) is a semiconductor engineer.

Disclaimer: The views expressed are the author's own. They do not necessarily reflect the views of DH.