India’s Semicon 2.0: High-Level Panel for Chip Incentives

The Indian government has initiated the formation of a high-level panel, co-chaired by the Principal Scientific Adviser and National Security Adviser, tasked with identifying strategic semiconductor chips eligible for incentives. This panel operates under the newly established Semicon 2.0 scheme, which carries a substantial outlay to enhance the nation’s semiconductor manufacturing capabilities.

Key Scheme Details

• The Semicon 2.0 scheme allocates an outlay of Rs 1.27 lakh crore.
• It is designed as a six-year program but is anticipated to conclude ahead of schedule.
• The scheme targets meeting up to 100% of domestic demand for various products, including sensors.
• Government exit strategies involve equity valuation or royalty financing at 1.5 times the investment.

Steering India’s Chip Strategy

This strategic move underscores India’s commitment to building a robust domestic semiconductor ecosystem. The panel’s role is critical in pinpointing specific chips that will receive support, ensuring resources are directed towards areas of national importance.

The Semicon 2.0 Framework

The Semicon 2.0 scheme is meticulously structured into six distinct segments, aiming for comprehensive development across the semiconductor value chain. These segments encompass various stages of chip production and innovation.

• Chip design
• Capital equipment
• Semiconductor fabs
• Assembly
• Packaging
• Testing

Union Minister Ashwini Vaishnaw confirmed that Semicon 2.0 aims to fulfill up to 100% of India’s domestic demand for a range of products, including essential components such as sensors.

Core Building Blocks and Collaboration

A primary focus of the initiative involves developing key semiconductor building blocks that are foundational to modern technology. This effort requires extensive collaboration across multiple sectors.

• Compute
• Memory
• RF (Radio Frequency)
• Power
• Networking
• Sensors

Indian companies are encouraged to collaborate with multinational corporations, academic institutions, and startups to foster innovation and accelerate development in these critical areas.

Accelerating Design and Investment

To further accelerate chip design, the government is actively exploring various mature platforms and open-source technologies. This approach seeks to leverage existing advancements while promoting indigenous capabilities.

• ARM
• IBM Power
• RISC-V
• Open-source technologies

Incentives for chip design have been broadened to include startups and OCI-owned companies, providing crucial financial support through grants and equity co-investment. The government has also outlined clear exit strategies, including equity valuation or royalty financing at 1.5 times the initial investment, demonstrating a planned approach to its financial commitments.

Strengthening the Ecosystem

The establishment of this high-level panel and the structured approach of Semicon 2.0 signify a concerted effort by the Indian government to significantly strengthen its semiconductor manufacturing ecosystem, ensuring both strategic independence and domestic supply chain resilience.