Government Allocates Rs 6903 Crore for Semiconductor Projects | In a strategic move to boost local value addition in manufacturing, the Government Allocates Rs 6903 Crore for Semiconductor Projects and reduced duties on raw materials for electronic components, as announced in the Union Budget for FY2024-25.
The budget document outlines a proposed allocation of Rs 4,203 crore for projects under a modified scheme to establish compound and discrete semiconductor manufacturing and assembly units in India. Additionally, Rs 1,500 crore has been earmarked for electronic chip plants, Rs 100 crore for electronic displays, and Rs 900 crore for the modernization of the Semi-Conductor Laboratory in Mohali.
The budget also proposes amending the First Schedule to the Customs Tariff Act, 1975, to introduce new tariff lines for products used in Indian semiconductor machines, e-bicycles, and printer cartridges, effective from October 1. Furthermore, Finance Minister Nirmala Sitharaman announced tax reductions on certain electronic parts and raw materials used in manufacturing components.
“To increase value addition in the domestic electronics industry, I propose to remove the BCD, subject to conditions, on oxygen-free copper for the manufacture of resistors. I also propose to exempt certain parts for the manufacture of connectors,” Sitharaman stated. She also announced exemptions for 25 critical minerals, such as lithium, copper, cobalt, and rare earth elements, which are essential for sectors like nuclear energy, renewable energy, space, defense, telecommunications, and high-tech electronics.
Hitesh Garg, VP and India Managing Director of NXP Semiconductors, welcomed the budget, highlighting a 52% increase in the 2024-25 allocation for the semiconductor industry. “This initiative aligns with India’s ambitions to establish itself as a leading player in global electronics manufacturing. I believe these strategic measures will accelerate growth in the semiconductor industry and enhance India’s stature as a preferred hub for semiconductors,” Garg remarked.
Additionally, the budget has proposed Rs 6,125 crore for the mobile phone Production Linked Incentive (PLI) scheme and Rs 75 crore for the IT Hardware PLI scheme. Pankaj Mohindroo, Chairman of the industry body ICEA, praised the tariff concessions on critical materials for strengthening the semiconductor ecosystem. “The concessions are provided to the extent of nil from existing BCD slabs of 10 to 2.5 percent, depending on the different critical metals. We also welcome the rationalization of tariffs on Silicon Quartz and Silicon Dioxide from 5/7.5 percent to 2.5 percent,” Mohindroo said, describing it as a crucial step towards establishing a robust silicon and power semiconductor wafer production ecosystem in India.
Rajoo Goel, Secretary General of electronics component body ELCINA, supported the reductions in customs duties and the extension of exemptions, calling them positive steps towards the industry’s growth and competitiveness. He emphasized the need for a comprehensive scheme dedicated to promoting the manufacturing of electronic components, parts, and modules. “Components and key modules used in electronic equipment have been a major stumbling block for the development of a sustainable ESDM sector in India. ELCINA believes that until this issue is addressed, we will remain dependent on overseas suppliers and struggle to take a leadership position in the global industry,” Goel stated.
Discussing employment-linked incentive schemes to boost job creation in the manufacturing sector, A Gururaj, Managing Director of Optiemus Electronics, emphasized the importance of a skilled workforce in the electronics manufacturing segment. “The announcement of various skilling initiatives and the scheme to incentivize additional employment in the manufacturing sector, particularly for first-time employees, will provide essential support to industries reliant on a skilled workforce, especially in electronics,” Gururaj remarked.
The Union Budget FY2024-25 showcases the government’s commitment to enhancing local manufacturing, supporting the semiconductor industry, and fostering job creation through strategic investments and policy reforms.
Source: PTI
