India prepares fresh $20 billion incentive plan to woo chipmakers

In its effort to establish itself as a semiconductor powerhouse, the Indian government is preparing a fresh $20 billion incentive programme to draw in both global and domestic chipmakers. Meity has reportedly sought the finance ministry’s approval for the plan, which will eventually be presented to the Union Cabinet. A final go-ahead is expected before the close of 2025, coinciding with the end of the first phase of the India Semiconductor Mission (ISM).

According to officials, Meity is compiling a comprehensive dossier assessing ISM’s first phase outcomes, benchmarking them against similar global schemes.

“The finance ministry had asked for an economic projection document from Meity, seeking clarity on the returns from ISM’s initial tranche, and how India compares with other regions, particularly the US, whose incentive packages are bigger but where market conditions are far more complex,” one official familiar with the discussions told a leading daily.

Globally, the US Chips Act allocates over $52 billion in subsidies and tax incentives for chipmakers, while the European Union’s Chips Act is targeting more than €43 billion in combined public and private capital. China, Japan, and South Korea have also pledged multi-billion-dollar support through grants, tax breaks, and direct funding.

Meity stated that while India’s incentive packages will inevitably remain smaller than those of the US, the country’s policy predictability and openness give it a unique edge for attracting long-term investment.