Chip Mission Set For Big Boost: Eight-Year Fiscal Support, $15 Billion Funding In The Pipeline

The government is considering extending the fiscal support period under the second phase of the India Semiconductor Mission (ISM) from five to eight years, according to a report by ET.

Projects approved under ISM Phase-II may also qualify for additional financial grants, including funding for employee skill training, interest-free loans from the government, and assistance from the Ministry of Electronics and Information Technology (MeITY) for preferential access to domestically manufactured and packaged chips.

However, there may be a shift in focus in Phase-II, with financial support for technology transfer costs potentially being reduced and more emphasis placed on funding administrative expenses.

In a strategic move, the government has decided to lower financial incentives for chip packaging units and redirect these resources towards attracting more chip fabrication companies to India. The capital expenditure subsidy for assembly and testing plants (ATMP/OSAT) is expected to decrease from the current 50 per cent to below 30 per cent on a pari-passu basis.

Successful applicants may also receive incentives ranging from 30 per cent to 35 per cent of their total capital expenditure for establishing units related to gases, chemicals, raw materials, metals, and other metallurgy sectors.

So far, the government has invested $11 billion in subsidies under its semiconductor manufacturing incentive policy, with three units breaking ground this year and a fourth recently approved.

These facilities include a chip fabrication unit in Dholera, Gujarat, and four assembly and testing plants — known in the industry as ATMP (assembly, testing, marking, and packaging) and OSAT (outsourced semiconductor assembly and testing). Three of these units are rising in Sanand, Gujarat, and the other in Morigaon, Assam.

Looking ahead, the government has outlined a blueprint for Phase-II of the ISM, which could see the programme's total outlay increased to $15 billion.