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To Reduce Semiconductor Chip Shortages, GOI Allocates ?76000 Crores

By Himanshu Walia | Published: 28 Dec' 21 | Updated: 14 Jan' 22

To Reduce Chip Shortages, Indian Government Allocates Rs.76000 Crores

Image Source: Mahindra

The government has launched a new scheme worth Rs. 76,000 crore to help the country's semiconductor and display manufacturing industries grow more rapidly. 


According to others, this represents an important milestone in the country's transition from depending on foreign aid to relying on domestic services to meet demand. In addition to indirect employment, it is anticipated that 35,000 new jobs would be produced as a result of this particular initiative. 


In addition to the announcement, Ashwini Vaishnav, Minister of Information Technology and Telecommunications stated that incentives will be available for companies engaged in compound semiconductors, silicon photonics, sensors fab, semiconductor packaging, semiconductor design, display fabs, and other related activities in order to boost the semiconductor and display manufacturing ecosystem in the country. 


Taking advantage of this declaration, the government anticipates investments totaling roughly Rs. 1.75 trillion over the next four years, with the result that 1,350,000 new positions will be created. 


With at least two display fabs and two greenfield semiconductor fabs in India, coupled with at least 15 compound semiconductor and semiconductor packaging units, it expects to see an increase in production volumes in the country. 


In accordance with the Design Linked Incentive (DLI) scheme, the necessary assistance will be offered to 100 local enterprises engaged in semiconductor design, with incentives of up to 50% available for eligible expenditure. 


Additionally, the India Semiconductor Mission (ISM) would be established for the purpose of establishing a sustainable semiconductor and display ecosystem in the country. 


The Indian car sector is suffering greatly as a result of the Semiconductor chip shortage, which has caused production activities to be slowed significantly for SUVs Like XUV 700 and MG Astor.


A protracted waiting period and an inability for automakers to utilize their manufacturing capacities to their full potential resulted as a result. 


It has been stated that more than seven lakh clients in India are still waiting for their orders to be delivered. 

Semi Conductor

Image Source: Volkswagen

All of India's automobile manufacturers have an excessive backlog of inventory. Maruti Suzuki, the country's largest producer of passenger vehicles, has a backlog of 2.5 lakh units, followed by Hyundai, Tata, and Mahindra Brand with one lakh each, Kia India with 75,000 units, MG with 46,000 units, Mercedes-Benz India with 2,800 units, and 75,000 units when Toyota, Nissan, Renault, Audi, VW, and Skoda are added together. 


In addition, it is projected that input costs have climbed by around 6% since the beginning of the year, and many automobile manufacturers have announced that the prices of new cars to be increased from January 2022.