Interim Budget 2024: Semiconductor Sector Expects Higher Allocation
The interim budget for India is set to be presented on February 1, 2024, with the full budget for the fiscal year 2024-2025 expected after the general elections in June, following the formation of a new government. In the previous Union Budget for 2023-2024, the government allocated Rs 3,000 crore for advancing India's semiconductor ecosystem, emphasizing the growth of semiconductors and display manufacturing. Anticipation surrounds the upcoming developments in the semiconductor industry, as discussions among industry leaders are fueled by the lack of detailed information about what lies ahead.
Shashwath T R, co-founder and CEO of Mindgrove Technologies said, “India is emerging as a semiconductor powerhouse so increasing initiatives like design-linked incentive (DLI) and production-linked incentive (PLI) schemes are commendable first for boosting the sector". The Centre should consider raising the DLI scheme from USD 200 million to a more substantial amount. Moreover, under this structure, startups have the opportunity to receive a reimbursement limit of Rs 15 crore; increasing this limit would encourage the participation of more players in the ecosystem, he added.
In a parallel sentiment, Sanjay Gupta, Chairperson of IESA, said that while design-related incentives were introduced in the previous budget, the primary focus for the current year should be directing risk capital towards deserving startups. Gupta highlighted the importance of achieving this objective through strategic partnerships with venture capitalists (VCs) or direct government support. Such initiatives, he asserted, would accelerate the advancement of semiconductor startups in India, empowering them to establish a formidable global presence.
Previous reports have indicated that the Indian semiconductor industry is poised to achieve a market size of USD 8.32 billion by 2024, with integrated circuits anticipated to be the dominant segment, reaching a projected volume of USD 3.76 billion. Given these optimistic figures, it is unsurprising that there are high expectations for the upcoming union budget. Taking the notch higher, Prithvideep Singh, General Manager, Continental Device India (CDIL Semiconductor) shared, “Our expectations are particularly high for the quick rollout of SPECS 2.0 and an expansion of the budget allocated to the India Semiconductor Mission".
“We strongly support an equitable allocation of funds, as there are several significant projects awaiting approval. However, if the allocation continues at its current pace, there is a risk of depleting the funds, which could potentially exclude crucial MSMEs from participating in the development of the semi-ecosystem", added Singh. Adding to this optimism, Sanjay Saha, India Country Manager, Synaptics expressed his firm belief that the government will introduce revolutionary initiatives that will not only enhance the utilization of technology but also stimulate growth in semiconductors, fabless design and the electronics startup ecosystem.
Meanwhile, Venkat Mattela, the CEO and founder of Ceremorphic, emphasized that India's semiconductor ambitions have garnered global recognition, thanks to government initiatives, investments in research and development, and strategic collaborations geared towards bolstering the industry's efficiency. “With the global semiconductor industry projected to reach a trillion-dollar mark by 2030, India is in a favorable position to emerge as a global hub for this sector. Therefore, it is anticipated that this year's budget will allocate a higher amount compared to the previous year, aligning with the country's objective of achieving self-sufficiency in chip manufacturing", he opined.
