Government will give $1 billion to chip-makers manufacturing in India

According to these officials, the Indian government has assured the manufacturing companies that the government will buy the chips from them. In addition, the government claims that there would also be clients in the private market that would like to buy locally-made chips.

However, the government hasn't decided how to disburse the amount to the chip manufacturers, says one of the sources.

Notably, there are currently two major semiconductor manufacturers in the world, Taiwan Semiconductor Manufacturing Company and Samsung. So, essentially, the world is either dependent on China or Taiwan.

Tensions between China and India have been growing recently, which is why India wants to cut its dependency on China.

The Indian government is therefore encouraging companies across the globe to establish manufacturing units in India.

In fact, automotive manufactures are not able to get enough semiconductors for electronic units, such as ECU and infotainment systems, in their cars. Many car companies had to halt their production lines due to the shortage.

PC parts have been out of stock at many places due to the semiconductor shortage. This issue has also inflated the prices of electronic items around the globe.

People have been working from home during the pandemic. This has resulted in a sharp rise in the demand for computers.

To solve this issue, many countries are encouraging chip manufacturers to set up new fabrication units in their regions by offering a subsidy, mostly in the form of tax rebates.