India's First Modern Display Manufacturing Unit In Telangana: All You Need To Know

Elest, a subsidiary of Rajesh Exports, has decided to build India's first modern display manufacturing unit in Telangana.

What this means: This comes in the backdrop of the union government's Rs 76,000 crore incentives package for domestic manufacturing of semiconductors and displays.

· It includes an investment of Rs 24,000 crore to make the most advanced AMOLED displays in the state.

· State IT and industries minister KT Rama Rao perceives this investment as a historic day for Telangana.

· He said that what was possible only in Japan, Korea, and Taiwan would now happen in Telangana.

A background: Vedanta and Elest submitted applications for Display Fabs in February 2022.

· Applicants projected investment of USD 6.7 billion and sought financial support from the Central Government of nearly USD 2.7 billion.

· Applications have been filed for setting up Gen 8.6 TFT LCD Display Fab and 6th Generation Display FAB.

· The aim is to manufacture state-of-art AMOLED display panels used in advanced smartphones.

Semicon India Programme: The Union Cabinet approved the Semicon India Programme with an outlay of Rs 76,000 crore in December 2021.

· India Semiconductor Mission (ISM) has been established as an independent institution to spearhead the Semicon India programme.

· The applicant companies under the Semiconductor and Display Fab Schemes have been acknowledged by ISM.

Why it matters: Semiconductors and displays are the foundation of modern electronics driving the next phase of digital transformation under Industry 4.0.

· For instance, displays account for over 25 per cent of the BoM in the case of smartphones and over 50 per cent in the case of LCD/LED TVs.

Where India stands: India's display panel market is estimated to be around USD 7 billion (over Rs 52 thousand crores).

· It is expected to grow to about USD 15 billion (over 1.15 lakh crore) by 2025.

· India's share in global electronics manufacturing has grown from 1.3 per cent in 2012 to 3.6 per cent in 2019, as per industry estimates.

· The domestic production of electronic goods has increased substantially from Rs 1.9 lakh crore in 2014-15 to Rs 4.97 lakh crore in 2020-21 (industry estimates) at a CAGR of 17 per cent.

Why this is not so great: Domestic value addition is estimated to be in the range of 10 per cent to 30 per cent only.

· Growth in manufacturing so far has primarily been on final assembly using imported components, sub-assemblies/parts, etc.

· This is due to the country's lack of a robust semiconductor and display manufacturing ecosystem.

What is being done: Semicon India programme is facilitating capital support and technological collaborations.

· The union government shall extend financial support of up to 50 per cent of project cost (subject to a ceiling of Rs 12,000 crore per display fab) on a pari-passu basis.

· Applicants need to be eligible and have the technology as well as capacity to execute such highly capital intensive and resource incentive projects.

· GoI will work closely with the State Governments to establish high-tech clusters with requisite infrastructure on the land, semiconductor-grade water, high-quality power, logistics and a research ecosystem.

Bottomline: The Union government currently aims to approve applications for setting up at least two Display Fabs in the country, and Elest's investment in Telangana could be part of it.