These discussions are likely to be held with countries that don’t have extensive semiconductor manufacturing capacities and are currently procuring chips from nations such as China and Taiwan.
The idea is to get industries in those nations to either purchase or give preference to India-made semiconductor chips, they said.
“We are looking at this to ensure that the semiconductor chips that are manufactured in India have demand globally,” said a senior government official, while adding that the talks are at a “very initial and exploratory stage right now.”
This move comes even as the centre is looking to secure consumers for India-fabricated semiconductor chips, the sources said.
The plan is to talk to developing countries which have more demand for “legacy node” semiconductor chips which also cost less to manufacture, according to the people cited above.
The Ministry of Electronics and Information Technology has also asked companies, which have applied for incentives under the Rs 76,000 crore semiconductor manufacturing incentive program, to provide details of where the demand for their products is likely to come from.Noting that demand in the semiconductor industry is cyclical, a senior official said that contracts are almost always long-term with some flexibility clauses depending on the global economic conditions.
“A new entrant to the supply side will have to offer some attractive terms to buyers,” he added.
At least five applicants, including the Vedanta-Foxconn joint venture, the ISMC-Next Orbit Ventures-Tower Semiconductor (now owned by Intel) joint venture and, Rajesh Exports—which applied for incentives under the Indian Semiconductor Missions’ Rs 76,000 crore incentive package- are awaiting official sanction to set up semiconductor fabrication units.
The IT ministry is in the process of vetting the applications by these applicants and has set up three sub-committees to evaluate the applications.
The ISMC-Next Orbit Ventures-Tower Semiconductor JV has announced setting up of a 65nm Analog semiconductor fabrication plant in Karnataka for an investment of Rs 22,900 crore. The Vedanta Foxconn joint venture has proposed setting up a fabrication unit in Gujarat without giving any details of the semiconductor chips it intends to manufacture there.
In December 2021, the IT ministry had unveiled the semiconductor fabrication incentive plan as a part of which the central government would make large, upfront investments – 50% fiscal support as per recent modifications – to back the semiconductor wafer fab proposals by various corporate entities.
In some cases, the governmental capital support could scale 70% after including the sops by the states as well, making it a one-of-kind push by the Government to seed an industry ecosystem in India.
Last year, the IT ministry had revised the terms of the semiconductor manufacturing programme to offer a flat 50% incentive to all applicants irrespective of the investment or the size of the chip they planned to manufacture.
Applicants to the government’s semiconductor manufacturing incentive plan need to demonstrate clear expertise in the specialised field of semiconductor manufacturing to qualify for incentives.
To receive government approval to set up a semiconductor fabrication in India, companies should either own a fabrication unit for semiconductor chips in the 65-28 nanometre range or possess the “production-grade licensed technologies” to make 28 nm chips. They must also provide visibility into advanced node technologies through licensing or development.
Industry experts are of the view that government effort to open channels with other nations is normal practice, given that the semiconductor manufacturing nations like Taiwan, Singapore and some western nations are a small grouping as of now.
“The effort by the Centre should be an ongoing drive because nations talk to one another often for market, capital and technology access,” K Krishna Moorthy, CEO of industry body India Electronics and Semiconductor Association, told ET.
