Two days after the government of India launched three ambitious schemes to boost electronic manufacturing in early June of 2020, I had written an opinion article in N4M viz “Who Will Cut The Pie In GOI’s 3 Schemes To Boost Electronic Manufacturing“.

I had then opined that “With over 40,000 crore outlay for PLI, clearly the government is prioritising “take what has already succeeded, to the next level” over aspects of the supply chain which are either unborn or are at baby stage” 

Once the deadline for submitting applications under the Production Linked Incentives (PLI) scheme of Ministry of Electronics and Information Technology (MEITY) was complete, on 1 August 2020, Union Minister Ravi Shankar Prasad through a live media briefing (placed below) announced that several companies – both domestic and International – have applied for benefits under it.

PLI scheme seems to have been a hit and it is good to see the boost for the predominantly “Assembly Testing Marking Packaging” (ATMP) segments.

Applications under the other two schemes – EMC2 and SPECS – are still not closed and seem to have attracted some Printed Circuit Board (PCB) and small electronic component manufacturers. These schemes include incentives to the tune of 50% on land and 25% on Capex, and applies to wafer manufacturers as well as wafer to chip (IC) manufacturers also. However, in these segments, it looks like some interested parties are waiting for a possibly bigger incentive – Minister Ravi Shankar Prasad confirmed in this interview that “It is right that it takes upwards of Rs 10,000 crore to set up full-fledged FAB. Ministry of Electronics and Information Technology (MeitY) is also working on separate policy towards setting up semiconductor FAB in the country”  

Now, there were four interesting “reasons” the Minister mentioned (between 10:40 and 11:20 of the 1-August media brief video placed above) of why India should be considered as a major destination for electronic manufacturing in general. Taking cue from that, I examine multiple factors grouped under “S” or “E” or “M” or “I” names and where each of those stand in terms of favouring or needing improvement for the possibility of a full fledged commercial semiconductor fab in India – it need not be a cutting edge one to begin with, I wrote about a $1.5 billion Analog fab possibility in this ORF article

1S for Stable Central Government

I am no expert at politics but from the looks of it, it does look like the second term of Narendra Modi is much more decisive and quick in action as opposed to the first term of five years. While policies and directions taken in 2014-19 seemed more geared towards ensuring a “come-back” in 2019, now Prime Minister Modi seems to be in a mood to usher in major reforms, and “leave a lasting mark” on the Nation’s future. Covid-19 did warrant a lot of attention and finance to be diverted, and yet earmarking over 40000 crores for PLI scheme and many other such schemes, confirm this commitment. One can only hope that the same kind and scale of measures will soon follow to boost chip manufacturing fabs (foundries) also in India

2S for State Governments

Barring a few exceptions, I did not see much media news about state governments talking about utilising these schemes – as I understood it, one of the three schemes – EMC2 – will have to be utilised in collaboration with State governments. I can only hope that things are on the roll and absence of news in the media does not mean no-action. It may augur well for the Central Ministry to now do some joint press briefings with each state who has come forward, immaterial of their political affiliations – that will go a long way in boosting investor confidence also.

3 S for Sentiment

The “boycott China and Chinese” sentiment – not just that of Indians, but that of global companies too – seems to have timed well into the success of the PLI scheme. However, “public has a short memory” and again one can only hope that the govt of India utilises the next few months to strike some solid progress in terms of kick starting semiconductor fabs in India too

4 S for Security

The security factor – individual’s data security as well as defence security – is enough to “counter” any arguments of “Does India need a billion dollar fab ?” and “Can’t we remain fabless ?” and so on. In my ORF article I mentioned how the US follows a “Trusted Foundry” model, but now, they are even talking about a zero trust model. India on the other hand, does not even have a full fledged foundry on its soil yet that can offer a decent amount of production. It will be hard to believe that the key decision makers in the Defence sector of India do not recognize the role that “Trusted electronics” play in current and future warfares, including cyber warfares, however it does surprise me that there is yet to be a serious study on how much India’s security is at risk because we have hardly any control in where and how the chips used in equipments used in India are getting manufactured. I hope the govt addresses this risk at the earliest

5 E for Engineering Talent

There is hardly any doubt about the general engineering talent pool that is available in India, however, the specific knowhow of semiconductor fabs is lacking a bit. Knowledge of the semiconductor design domain does not automatically translate to knowledge about fabs. This aspect however is quite solvable and will happen if and when fab in India comes up.

6E for Ease of doing business

From an overall ranking at 142 in 2014 to 63 in 2019, India surely has progressed, however at ‘Doing Business Rankings’,  one can see the finer details and it is clear that some areas still need improvement. The good thing to note is that India ranks 22 in “getting electricity” and 25 in “getting credit”, much better than even the overall rank of 63. For matters like “ease of getting electricity” certain states are likely to score better, and in an International scenario, may rank even better that India’s average of 22.

7M for Market

There is no doubt that India offers a huge market. However, when it comes to semiconductor fabs, ensuring demand for Chips manufactured in India via preferential market access may also be needed to ensure that the fab’s production lines are kept near full. I have written some thought starters in this Swarajya article as well as towards the end of this article

8M for Mindset

Like for any venture, there are a few Indians or NRIs who want to discourage fabs in India – I have hinted at possible reasons why they do it, in this article titled – “Here Is Why Some Indians Continue To Peddle Negative Notions About The Possibility Of #FabInIndia”. More people from the currently “silent majority” of those who support #FabInIndia may need to speak up. One such article presenting the value addition that semiconductor fab in India can bring, was published here .

9I for Infrastructure

While there is no doubt that India needs to continue to work on improving its infrastructure in general, matters hitherto considered tough are achievable in today’s India. I have written about the water-needed calculations in this article and also given some suggestions on how the uninterrupted power needs can be managed as well

10I for Incentives

Going by the success of PLI, it does look like the government is willing to put money where it matters. “Rumours” are that the new semiconductor fab policy of the government may offer even better incentives than what is offered in SPECS. Though this article published on 23-July said “Indian companies will be incentivised to set up semiconductor fab units to manufacture internal components and chipsets for hand-held devices and small appliances. There would be tax advantages as well as some sops provided for real estate, land. Soft loans could also be given,” said an official. we are yet to see the “final draft“. It is not clear what the government is waiting for – time is of essence to get #FabInIndia

The next few weeks or months may prove whether the distance from the “S” of the Sentiment to the “I” of the investor is a short one or a long one for semiconductor fabs in India.


  1. Agree that “It may augur well for the Central Ministry to now do some joint press briefings with each state who has come forward, immaterial of their political affiliations – that will go a long way in boosting investor confidence also.”

    But why aren’t the States coming forward to share the responsibility & give it a boost.. Is politics hampering it. Why even BJP ruled states shying off. Can anyone tell..

    • Raghav, I dont think that all the state govts are “shying off”. There was news that Tamil Nadu has started using EMC2 . The July23 article that I quoted mentions Gujarat. Also, for companies to utilise PLI and boost production, I am guessing at least some of them may have to “expand” in terms of land and facilities and yet again perhaps EMC2 may be used and quite likely the plans are in place. Just that I do not see much of that coming out in the public domain – perhaps because state govts are not as “press briefing” savvy as MEITY has been (off late). Thats is why I suggested, perhaps MEITY should hand hold. Having said that, lack of proactiveness (at least so it seems) from some states like Karnataka do surprise me a bit . While the Dy CM “offered land” to Intel, that so far seems more like a ‘formality’. Why isnt the state using the Central govt schemes properly and pushing for some solid development in Coastal Ktaka or North Ktaka (both with tremendous potential in my opinion) is a mystery – unless of course something is silently happening


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