Govt not keen to cover land, tech transfer costs in new chips scheme, Pg21

Key Highlights:

• The India Semiconductor Mission (ISM) 2.0 will no longer offer subsidies for technology transfer costs or land acquisition for chip manufacturing plants.
• The Union Cabinet approved ISM 2.0 with an outlay of Rs 1.27 lakh crore.
• The government's priority under the new scheme shifts towards subsidizing chip design and the broader ancillary supply chain ecosystem.
• Capex subsidies for silicon fabs are reduced to 40%, and for other fabs to 35%, compared to a uniform 50% in the previous iteration.

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Detailed Insights:

• The decision to remove subsidies for technology transfer costs stems from the difficulty in reliably calculating these often opaque expenses.
• State governments are now expected to take the lead in facilitating land acquisition for semiconductor manufacturing units.
• ISM 2.0 aims to attract investment by offering grants and potentially taking equity in design-focused semiconductor companies.
• India's strategic goal is to achieve capability to design and manufacture chips for 70-75% of domestic applications by 2029.
• By 2035, India aims to be among the top global semiconductor nations, enhancing domestic value addition in electronics.
• The previous ISM 1.0 had attracted 12 chip-making plants, including a fabrication facility by the Tata Group.

Key Concepts Involved:

• India Semiconductor Mission (ISM): A government initiative to establish India as a global hub for semiconductor design, manufacturing, and packaging.
• Semiconductor Fabrication Plant (Fab): A facility where integrated circuits (chips) are manufactured on silicon wafers.
• Technology Transfer Costs: Expenses incurred by a company to acquire intellectual property, designs, or manufacturing processes from another entity.
• Capex Subsidy: Financial assistance provided by the government to reduce the capital expenditure (investment in fixed assets) for setting up industrial units.