India gets investment offers worth $20 billion for semiconductor production

India has received investment proposals worth $20.5 billion from five companies to manufacture semiconductor and display fabs locally, as per a government statement. Companies such as Vedanta in a joint venture with Foxconn, Singapore-based IGSS Venture and ISMC have proposed an investment worth $13.6 billion for producing chips here. These three companies have sought the support of $5.6 billion from the federal government under its incentive plan, as per a report by Bloomberg.

Two more companies, Vedanta and Elest, have submitted investment offers worth $6.7 billion to produce display fabs and also have sought incentives of $2.7 billion from the government, added the statement.

In a statement, the Ministry of Electronics and Information Technology said despite the stringent timelines for the submission of applications in this segment of semiconductors and display manufacturing, the scheme has attracted a good response.

The report informed the semiconductor market of India is estimated to touch $63 billion by 2026 compared to the $15 billion in 2020. This incentive program is an initiative taken by Prime Minister Narendra Modi to help boost the manufacturing segment of the economy that has been impacted by the pandemic. These incentives were announced as it is feared that the global chip shortage is likely to extend until early 2023 and demand may remain above the long-term expectation in 2022.

The global semiconductor shortage has been plaguing the automotive industry for some time now and the production of many automakers have been impacted due to this. Auto companies such as Toyota and Volkswagen slashed their production volumes and also paused manufacturing in their factories. The Indian automakers too have faced the brunt of the global chip crisis.