Checkout chip makers’ stocks that surged on PLI scheme; industry leaders feel the move will make India self-reliant

• The government has passed a ₹76,000 crore ($10 billion) incentive scheme for semiconductors, which will strengthen India’s manufacturing base in making semiconductor chips.
• Also, about 85,000 semiconductor engineers would be supported over the course of the next 20 years.
• The development comes at a time when many companies across the world have been suffering from a chip shortage for so long now.

Finally, some of the semiconductor shortage will hopefully ease after the Indian government announced an ambitious production-linked incentive (PLI) scheme worth ₹76,000 crore (around $10 billion at current rates) for establishing a semiconductor ecosystem in the country.

The development comes at a time when auto majors and several other companies using chips in their products across the world have been suffering from a chip shortage for so long now.

Semiconductor chipsets are used across a wide range of consumer electronics, including smartphones, laptops, computers, cars, smart home appliances like lights, fans and many other things.

There are many semiconductor manufacturers across the world, but very few are listed in the Indian market.

This is not the first time that the government has announced a PLI scheme for the electronics industry. Earlier last year, a ₹50,000 crore PLI scheme was announced to woo electronics manufacturing, including smartphones.

Following Wednesday’s announcement, Nifty Auto was the only gainer amongst all other sector indices that were in red in line with the volatile market.

P.N. Sudarshan, partner and technology, media, and telecom (TMT) Industry Leader at Deloitte said that, “While this initiative may ameliorate the situation in the medium term, this is even better in the long-term as this would spur the semiconductor manufacturing segment. That would provide opportunities both for import substitution and export propulsion.”

Leaders from the industry believe the move will prevent future semiconductor shortages.

“In the long-term, issues like sudden surge in demand for semiconductors will also be addressed. This move will also make the Indian manufacturers globally competitive to attract investment in the areas of core competency and cutting-edge technology,” said Sanjay Gupta, managing director at NXP India.

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