The Union Cabinet has approved ₹76,000 crore scheme for chip making. The scheme is for the semiconductor and display board production in the country.
Telecom and IT Minister Ashwini Vaishnaw said that the decision will help fabrication, design, packing and testing of the microchips. This will also transform the ecosystem completely.
The auto majors and other companies that uses chips in their products have been suffering from chip shortage across the world. So, the decision of approving ₹76,000 crore will benefit these companies.
P.N. Sudarshan, partner and technology, media, and telecom (TMT) Industry Leader at Deloitte said that the initiative may for now ameliorate the situation in medium term, but we can see the initiative for the long-term as well. this will surely spur the semiconductor manufacturing segment. This will further provide opportunities for both import substitution and export propulsion.
How will the scheme help India?
The scheme will help the country to decrease import dependency. Along with this, it will also bring huge investments and increase the number of job opportunities.
Apart from 1 lakh indirect employment opportunities, the scheme will help to create around 35,000 specialized jobs.
What are semiconductors & how its shortage affecting the industries
Semiconductors are the main components used to manufacture different electronic devices. These devices include laptops, smartphones, cars, and other vehicles as well.
It’s been more than a year now since there is shortage of semiconductors. Due to this shortage several industries have been adversely affected. It has specially affected the manufacturing of gaming consoles, smartphones, automobiles, personal computers, and medical devices.
The Global vehicle production in this year i.e., 2021 was also impacted due to the shortage. The global auto industry may produce 6.3 to 7.1 million fewer vehicles as there are very less semiconductor chips.
PLI scheme has not been announced for the first time
The recently announced PLI scheme by the Union Cabinet is not for the first time. In 2020, Union Cabinet announced a ₹50,000 crore PLI scheme. This was announced to woo electronics manufacturing, including smartphones.
What Government said about the PLI scheme
The government said that the development of semiconductor and display ecosystem will for sure have a multiplier effect across different sectors of the economy. This will be a deep integration to the global value chain. The program will also promote domestic value addition in electronics manufacturing.
Not only this, but it will contribute significantly to achieve $1 trillion economy and $5 trillion GDP by 2025.