The Union Cabinet on Wednesday approved the semi-conductor Production Linked Incentive (PLI) scheme. Union Minister Ashwini Vaishnaw said the government's Rs 76000 crore is a Design Linked Incentive scheme. Under the scheme, 50 percent of design expenditure will be borne by the government. Additionally, the government will provide a 6 percent incentive on incremental sales, 6 percent will taper over 5 years to 4 percent.
The government has prepared a Rs 76,000 crore incentive program. The government has estimated that the incentive program will invite investment of Rs 1.7 lakh crore. It is also hoping to attract players like Intel, Mediatek, Qualcomm, among others.
Welcoming the move, Sanjay Gupta, Managing Director at NXP India, said, "The approval of Rs 76,000 crore PLI scheme for semiconductors under which Rs 2.3 lakh crore of incentives will be given is a welcome move. This will enable India to become an electronics hub and encourage corporates to start manufacturing in India. It is a big step to bring India on the world map of the semiconductors industry as it will pave the path for the industry to broader the horizon of research, manufacturing and export."
Meanwhile, semiconductor crises continue to haunt private vehicle sales as despite huge bookings. Dealers were unable to satisfy customers due to supply issues resulting in long waiting periods, the Federation of Automobile Dealers Association (FADA) said.
The total vehicle retail sales declined 2.7 percent on a YoY basis in November. When compared to November 2019 (a regular pre-COVID month), overall retails continued to fall by 20 percent. The two-wheeler retails were down 1 percent in November 2021, private vehicles by 19 percent and tractors by 9 percent on a YoY basis, FADA said.
Last month, Morgan Stanley released a note stating that the auto chip shortage issue is now in the rearview mirror. The report found that the Malaysian fabrication plants were back to 100 percent and that in Asia, there was a pent up demand for server shipments.