India Looking to Roll Out Package to Incentivize Semiconductor Manufacturing

The Ministry of Electronics and Information Technology (MeitY) is taking significant strides to strengthen India’s electronics manufacturing ecosystem, with a proposal aimed at increasing local value addition and positioning the country as a global leader in the industry. A dedicated task force, established six months ago, has now submitted actionable recommendations after thoroughly assessing the scheme’s viability and market readiness. These recommendations are currently under review and will be forwarded to the Ministry of Finance for final approval. The initiative represents a critical step in transforming India from an assembly hub for global electronics manufacturing services (EMS) into a powerhouse for innovation and production.

The primary goal of this initiative is to create a robust domestic electronics market capable of supporting local semiconductor fabs and attracting global players to India’s semiconductor ecosystem. Such measures are seen as essential to preventing stagnation in the EMS sector and safeguarding local brands, which have faced significant challenges in the past due to competition from foreign manufacturers, especially Chinese smartphone companies. By focusing on local value addition, the government aims to enhance India’s capabilities across the entire electronics supply chain, ensuring long-term growth and sustainability.

The proposed incentives will be disbursed in three tranches, calibrated to companies’ revenue milestones, ensuring that support is tied to performance and scalability. This strategy aligns with India’s vision of increasing its share in the global electronics market, valued at $4.3 trillion. Currently, India accounts for only $155 billion, but the government is determined to scale this figure significantly. Establishing a self-reliant semiconductor and electronics manufacturing ecosystem is seen as pivotal to achieving this ambition.