MUMBAI: The Central government is finalizing an incentive package of more than USD10 billion to attract companies to start manufacturing semiconductors in the South Asian nation, as per news reports.

The government will offer incentives of Rs 76,000 crroe over 6 years for domestic production of semiconductor fabs, display fabs, design and packaging to cut down dependence on imports under the plan. The Cabinet is expected to take up the proposal for approval soon. The incentive program, proposed by the electronics ministry, is an effort by Prime Minister Narendra Modi to boost the share of manufacturing in the economy and reverse the pandemic induced slowdown.

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The development comes amid prediction that a global chip shortage is likely to extend until early 2023 and demand may remain above the long-term expectation in 2022. The proposed plan includes government providing up to 50 percent of CAPEX  to entities  selected for manufacturing semiconductor fab along with providing designlinked incentives, a report said. The package is likely to be over and above the production-linked incentives for manufacturing of electronic components and semiconductors. The incentive plan will help India attract investments worth Rs 1.7 lakh crore in the next six years.