Talking solely to CNBC-TV18 after Finance Minister Nirmala Sitharaman introduced her ninth consecutive Union Finances on February 1, Krishnan stated the primary section of India’s semiconductor push has laid a agency industrial basis, whereas the following section — Semicon 2 — will give attention to increasing the ecosystem and advancing India’s strategic autonomy in essential applied sciences.
On the similar time, the Finances’s shock announcement of a 20-year tax vacation for AI information centres has opened up recent expectations that India could possibly be positioning itself as a world hub for information infrastructure — probably echoing the position Software program Know-how Parks of India (STPI) performed in driving software program exports three many years in the past.
Semicon 1 milestones: India’s first fabs near manufacturing
Krishnan stated Semicon 1 has already resulted in 10 semiconductor items being authorized, with extra tasks probably earlier than the scheme formally closes.
“The primary of these tasks ought to start full industrial manufacturing in a matter of weeks or months,” he stated, including that inside a couple of months, round 4 tasks could possibly be totally grounded and operational, with others coming on-line over the following yr.
India’s semiconductor pipeline consists of a mixture of high-value manufacturing capabilities:
- A full-fledged CMOS silicon fab
- A compound semiconductor fab
- Eight packaging items throughout a variety of applied sciences, together with legacy and superior nodes
The progress marks considered one of India’s most important steps but in the direction of constructing a home semiconductor manufacturing base.
Semicon 2 to increase past fabs, give attention to full ecosystem
Whereas Semicon 1 targeted on anchoring preliminary fabs and packaging amenities, Krishnan stated Semicon 2 will place higher emphasis on constructing the whole semiconductor ecosystem — a essential lacking hyperlink in India’s ambitions to change into globally aggressive.
Aside from attracting extra fabs and packaging items, the following section will give attention to:
- Superior semiconductor packaging
- Gear manufacturing inside India
- Supplies provide chains, together with gases and chemical substances
- A revamped Growth Linked Incentive (DLI) scheme for chip design
The aim, Krishnan stated, is to allow India not solely to fabricate chips but in addition to develop indigenous semiconductor merchandise that improve nationwide functionality and resilience.
“This may enable us to develop semiconductors in essential areas vital for India… and insulate us from a sovereign perspective by giving us the strategic autonomy that we’d like,” he famous.
Finances’s AI information centre tax vacation attracts consideration
One of many Finances’s most generally mentioned bulletins has been the proposal for a 20-plus-year tax vacation for AI information centres — a transfer that many within the business have described as unexpectedly beneficiant.
Krishnan, nonetheless, stated the coverage is rooted in a fundamental financial precept: export-oriented companies shouldn’t be burdened with home taxation.
“The thought we at all times work on is that we don’t export taxes,” he defined.
For information centres that retailer and course of data for abroad prospects with no home linkage, the exercise is successfully handled as an export service, justifying the tax reduction.
STPI-style second for AI infrastructure?
The dimensions of the inducement has prompted comparisons with the STPI framework of the Nineties, which helped India emerge as a world software program export powerhouse.
Krishnan instructed that the federal government’s method is geared toward making a globally aggressive surroundings for AI infrastructure, whereas sustaining equity inside the home tax framework.
He clarified that whereas export-oriented information centre operations could obtain tax advantages, any enterprise performed inside India would nonetheless have to function via resident entities and be taxed usually.
“For a degree enjoying area, everybody has to have the identical degree of taxation,” he stated, underlining that the federal government doesn’t intend to create everlasting institutions that escape home tax obligations.
Additionally Learn | Half of the worldwide chip design will occur in India to spice up semiconductor business, says Ashwini Vaishnaw
India’s twin tech bets: chips and cloud
The Finances 2026 bulletins underscore India’s broader technique of securing its place within the world expertise financial system via two parallel tracks:
- Constructing home semiconductor manufacturing and design capability
- Scaling AI-ready information infrastructure to serve world markets
With the primary semiconductor fabs nearing manufacturing and a recent push anticipated underneath Semicon 2, alongside main incentives for AI information centres, the federal government seems to be laying the groundwork for India’s subsequent section of technology-led development — one that might form each industrial competitiveness and strategic autonomy within the years forward.
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