Union Cabinet approves changes in PLI Scheme for compound semiconductors, display fabs

In a significant development, the Indian government has announced that the Union Cabinet will now have the authority to issue approvals for the establishment of compound semiconductors and display fabs assembly and test units under the Ministry of Electronics and IT’s (MeITY) production-linked incentive (PLI) scheme. This decision was made public through a government notification released on June 10.

Previously, the responsibility of granting approvals for applications valued up to Rs 100 crore rested with the MeITY Secretary, while those exceeding this threshold were evaluated by the Union Minister for Electronics and IT. However, the recent notification from the MeITY has eliminated this categorization, thereby designating the Union Cabinet as the sole authority responsible for approving applications under the PLI scheme.

According to the notification, applications will now be appraised and evaluated individually on an ongoing basis, with the Ministry of Electronics and Information Technology submitting the applications for approval to the Union Cabinet.

The PLI scheme, officially known as the “Modified Programme for Semiconductors and Display Fab Ecosystem,” was initially introduced in December 2021 with a total outlay of Rs 76,000 crore. In September of the following year, the scheme underwent revisions to attract global investors by offering more enticing incentive support.

Previously, the scheme provided incentives with varying levels of fiscal support, ranging from 30 percent to 50 percent. However, the government later decided to make the support uniform, committing to funding 50 percent of the project cost across all technology nodes for the establishment of semiconductor fabs. This includes not only cutting-edge computing chips but also those used in the power, telecom, and automotive sectors.

With the Union Cabinet now having the authority to grant approvals for applications under the PLI scheme, it is expected that the decision-making process will be streamlined, providing a centralized and efficient system for evaluating and promoting the development of compound semiconductors and display fabs in India. This move aligns with the government’s ongoing efforts to strengthen domestic manufacturing and attract investments in the electronics and IT sectors.

Overall, this development signifies a significant step towards creating a favorable environment for the growth of the semiconductor and display fab industry in India, fostering technological advancement and boosting the country’s self-reliance in these critical sectors.