Indian Govt will Give $1 Billion to Semiconductor Chip Manufacturing Units

The government of India will be offering more than $1 billion dollars in cash to every company that sets up a semiconductor manufacturing unit in the country. The news was revealed by two Indian government officials, and both the sources have requested to stay anonymous. One of the two officials is a senior government employee. And according to these officials, the Indian government has assured the manufacturing companies that the government will buy the chips from them.

Also, the government claims that there would also be clients in the private market that would like to buy locally made chips. However, the government has not decided how to dispose of the amount to chip manufacturers. This is one of the sources that have revealed information. And there are currently two major semiconductor manufacturers in the world, Taiwan semiconductor manufacturing committee company and Samsung. So essentially, the world is either dependent on China or Taiwan. Now, tensions between China and India have been growing recently, which is why India wants to cut its dependency on China. And it is, of course, the need for an hour.

The Indian government is therefore encouraging companies across the globe to establish manufacturing units in India. Now, India is offering more than $1 billion, which is roughly Rs. 7340 crores in cash to each semiconductor company that sets up manufacturing units in the country as it seeks to build on its smartphone assembly industry and strengthen its electronic supply chain. It’s a huge sum in cash to each semiconductor company that sets up manufacturing units in the country. A year ago, we’ve just been talking about how ‘Aatma Nirbhar Bharat‘ needs to be a reality. And after the India-China LAC standoff, we are witnessing huge changes, drastic changes, in fact, in the Aatma Nirbhar vision.

This is exactly what China did years ago and became a world factory. They were direct cash incentives given to the factory owners who have set up their factory ages ago. This is not a PLI (production link incentives). This is slightly different from production link incentives, which we have been witnessing in food processing in other electronic items. This is a direct cash payment to anyone who wants to set up a semiconductor unit is this is an absolute direct benefit.

So, you need to distinguish between a PLI and this. Because at this point of time, as we talk, we saw Ford motors sending 10,000 employees on furlough because they did not have these computer chips. They were missing, they were shot in supply. And thanks to the Chinese which has about a 10% market share in the computer chips and of course Samsung and there are a few others here and there. But I think it is because of the lockdown that there was a sudden spurt in the demand for computers and laptops.

And you know these chips are used in automobiles, they are used in laptops, they are used in every electronic item, which has got a processor in it. So this is got a processor base requirement that this isn’t practically required for every other thing, which we use in our lives. I mean, without our knowing. semiconductors have become part and parcel of our lives, very quietly, very silently and today we have become indispensable. And suddenly when there was a demand rise the world found itself unprepared for the kind of demand that was made. That is what has landed us in this situation today. Thanks to the Coronavirus, and thanks to the Chinese the changing attitude of the world towards China.

I think today every country wants an alternate supply of these semiconductor units and I think Indian Government has very rightly grabbed this opportunity with both hands, that if you To set up this there’s no rocket science and making these chips By the way. We can send rockets to the moon if we can send rockets to Mars. If we can have an agency like ISRO manufacturing these computer chips is no rocket science. It’s easy. All that is needed as we just need to pull out our mindset where we were dependent on China because they were coming at a very, very reasonable price on China for all this while. Not just India, the rest of the world was also dependent on China and Korea support even Samsung unit was in China.

So, I think the right step was taken by the Government of India. This would incentivize the people who did not have the capital to come out at the forefront and manufacture these computers. If it does require a substantial investment setting up a factory for computer chips. I think the step is just the right one. This is what is needed if you want the ‘Aatma Nirbhar Bharat’ plan to take off the ground. I mean, if you want it to convert from theory to practice, this is exactly is precisely what China did ages ago before becoming a world factory. This gives direct benefit direct cash to people let them come forward, Govt pays cash, the factory is there, let’s see entrepreneur run the unit make profits grab the world market export supply domestic.

The government is even assured that we will buy if you cannot sell we are giving you a guarantee that we are going to buy your entire production apart from you will have a huge demand from private players. But we can entirely buy out your whole production. So, I think it’s a win-win situation if I’m an entrepreneur looking to set up a factory, I will just blindfold myself and set up a factory for manufacturing computer chips. I get the money, I get a ready-made market I get killed labor with the government is going to help you on I mean what else do I need? All I need is to set up a semiconductor factory in India. A very welcome step from the government right.