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Cabinet approves PLI scheme for development of semi-conductor manufacturing in India

News: The Union cabinet has approved a programme (amounting to | 76,000 crore i.e. >US$ 10 billion) for developing India as a global hub for electronics system design and manufacturing. It includes incentive package for companies across the value chain in the semi-conductor and display manufacturing and design. It proposes to extend fiscal support of up to 50% of project cost to eligible applicants (with requisite technology prowess) in the domain of semiconductor fabrication. It also includes design led incentive amounting to upto 50% of eligible expenditure and product deployment linked incentive of 4-6% on net sales for five years

View: Given the high capital intensity in the semi-conductor manufacturing domain fiscal support on capital expenditure is a welcome step and is expected to go a long way in establishing sustainable semi-conductor manufacturing in India. This bodes well for the domestic automobile sector, which in the recent past has been witnessing shortage of semi-conductor supplies. The benefits of the said programme are, however, expected to accrue post 12-24 months given the high gestation period in securing the requisite inputs as well setting up of entire value chain

Impact: Positive