File No.

W-38/23/2021-IPHW
Government of India
Ministry of Electronics and Information Technology (MeitY)
(IPHW Division)

Dated: 30th December, 2021

Subject: Guidelines for effective functioning of the Scheme for setting up of

Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor
Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India

1. Background

1.1 The Scheme for setting up of Compound Semiconductors / Silicon Photonics /

Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging
(ATMP) / OSAT facilities in India (hereinafter referred to as ‘Scheme’) has been
notified vide notification No CG-DL-E-21122021-232047 dated 21.12.2021.

1.2 As per Para 8 of the Scheme, the Scheme shall be open for receiving applications
initially for a period of Three Years starting from 01.01.2022. Tenure of the Scheme
may be extended with the approval of the Minister of Electronics and Information
Technology (MEIT).

1.3 In pursuance of Para 13 of said Scheme and for the effective operation and smooth
implementation of the Scheme, the following guidelines are being laid down that are
to be read along with the Scheme. In case of any inconsistency between the Scheme
and the guidelines, the provisions of the Scheme shall prevail.

1.4 The Scheme guidelines inter-alia cover the following:

a) Definitions

b) Eligibility for Fiscal Support

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 c) Eligible Capital Expenditure / Investment

d) Nodal Agency

e) Application

f) Approval

g) Claim for Fiscal Support

h) Disbursal of Fiscal Support

i) Other Support

j) Related Party Transactions (RPT)

k) Review and Impact Assessment

l) Residual

2. Definitions

2.1 Applicant: Applicant for the purpose of the Scheme is a legal entity i.e., Private
Limited Company or a Public Limited Company making an application for seeking
fiscal support under the Scheme.

2.2 Application: Application means an application submitted by an applicant in the

Application Form prescribed in Annexure of the guidelines containing requisite
information, along with the supporting documents and application fee.

2.3 Acknowledgement Date: Acknowledgment date is the date on which, based on the
initial scrutiny of the application, acknowledgment is issued by the Nodal Agency.
Acknowledgement of an application shall not be construed as approval under the
Scheme.

2.4 Approval Date: Approval date is the date on which approval letter for the project /
unit is issued by the Nodal Agency to the applicant.

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2.5 Project / Unit: A Project / Unit under the Scheme would be a new business unit or
expansion of capacity / modernization and / or diversification of an existing unit which
an applicant intends to implement as per an application submitted under the
Scheme.

2.6 Approved Project / Unit: Approved Project / Unit means a project for which approval
letter is issued by the Nodal Agency appointed for this purpose by the Ministry of
Electronics and Information Technology (MeitY), based on the recommendations of
the Competent Authority.

2.7 Commercial Production: “Commercial Production” implies that the production is

undertaken for the sale of manufactured goods by the approved Project / Unit as
defined in relevant accounting standards issued by ICAI. In case of expansion /
modernization / diversification projects, the date of commencement of commercial
production shall be the later of (i) the date of actual commencement of commercial
production for the project and (ii) the date by which the entire investment to be
claimed under the Scheme has been made and capitalised in the books of account
of the Applicant.

2.8 Capital Expenditure: Capital Expenditure shall include Capital Investment for the
following:

2.8.1 Capital Expenditure / Investment incurred on Building, Plant, Machinery, Clean

rooms, Equipment and Associated Utilities: This shall include expenditure on
building, clean rooms, plant, machinery, equipment and associated utilities
((including used / second hand / refurbished), as well as tools, dies, moulds,
jigs, fixtures (including parts, accessories, components, and spares thereof) of
the same, used in the manufacturing process eligible under the Scheme. It shall
also include expenditure on packaging, freight / transport, insurance, and
erection and commissioning of the plant, machinery, equipment and associated
utilities. Associated utilities would include captive power and effluent treatment
plants, essential equipment required in operations areas such as clean rooms,
air curtains, temperature and air quality control systems, compressed air, water

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 & power supply and control systems etc. Associated utilities would also include
IT and ITES infrastructure related to manufacturing including servers, software
and ERP solutions.

2.8.2 Capital Expenditure / Investment incurred on Research and Development

(R&D): This shall include expenditure on in-house and captive R&D. Such
expenditure shall include test and measuring instruments, purchase of design
tools, software cost (directly used for R&D) and license fee, expenditure on
technology, IPR, Patents and Copyrights for R&D.

2.8.3 Capital Expenditure / Investment related to Transfer of Technology (ToT)

Agreements: This shall include cost of technology and initial technology
purchase related to manufacturing of goods for which application is made under
the Scheme.

2.8.4 Capital Expenditure / Investment incurred on Land: The expenditure incurred

on land required for the project / unit shall not be considered towards eligible
capital expenditure / investment computation under the Scheme.

2.9 Eligible Capital Expenditure / Investment: The capital expenditure / investment

which is considered eligible for fiscal support under the Scheme as per the approval
letter issued to the applicant.

2.10 Related Party(ies): The term related party(ies) would be as defined as per
provisions of relevant statutes and Accounting Standard, as may be applicable to
the applicant, as notified by Ministry of Corporate Affairs (MCA) or any other
appropriate authority from time to time.

2.11 Nodal Agency: Nodal Agency for the purpose of the Scheme shall be India
Semiconductor Mission (ISM).

2.12 Competent authority: Competent Authority for approving fiscal support for any
selected applicant upto ₹100 crore will be Secretary, Ministry of Electronics and
Information Technology (MeitY). Approval of fiscal support above ₹100 crore for a

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 selected applicant will be done by Minister of Electronics and Information
Technology (MEIT).

2.13 Force Majeure: Extraordinary events or circumstances beyond human control such
as an event described as an act of God (like a natural calamity) or events such as a
war, strike, public health emergency, riots, crimes (but not including negligence or
wrong-doing, predictable / seasonal rain and any other events specifically excluded).

2.14 Group Company(ies): Group Company(ies) shall mean two or more enterprises
which, directly or indirectly, are in a position to:

a) Exercise twenty-six percent or more of voting rights in other enterprise; or

b) Appoint more than fifty percent of members of board of directors in the other
enterprise.

3. Eligibility for Fiscal Support

3.1 Support under the Scheme shall be provided only to applicants meeting eligibility
criteria as defined under Paras 3.1 and 3.2 of the Scheme.

3.2 In case of a consortium / joint venture, the criterion may be satisfied by one or more
group companies.

3.3 The Scheme shall be applicable for investments in new units as well as expansion
of capacity / modernization and / or diversification of existing units. The minimum
investment thresholds are same for new units or expansion of capacity /
modernization and / or diversification by existing units.

3.4 If an application is made for Fab as well as ATMP unit, then the minimum threshold
of capital expenditure / investment applicable for such application shall be the higher
of the individual threshold investment for each of the category covered under the
application.

3.5 Eligibility under the Scheme shall not affect eligibility under any other Scheme of
Government of India and State Governments and vice-versa. However, an applicant

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 under the Scheme will not avail fiscal support under the Scheme for Promotion of
Manufacturing of Electronic Components and Semiconductors (SPECS) under the
Micro / Nano-electronic components such as Micro Electro Mechanical Systems
(MEMS) and Nano Electro Mechanical Systems (NEMS); Assembly, Testing,
Marking and Packaging (ATMP) units and Compound Semiconductors such as
GaN, SiC, GaAs, etc. and Silicon Photonics devices / Integrated Circuits,
Optoelectronic components

4. Eligible Capital Expenditure / Investment

4.1 Capital expenditure / investment as defined in Para 2.8 of the Guidelines shall be
considered for determining eligible capital expenditure / investment under the
Scheme provided such expenditure is made on or after the date of
acknowledgement of an application and within 5 years of date of acknowledgement
of such application.

4.2 Capital expenditure / investment incurred before the date of acknowledgement of

application under the Scheme shall not be considered for calculation of eligible
capital expenditure / investment under the Scheme.

4.3 Capital expenditure / investment, based on which eligible capital expenditure /

investment is being determined, shall be capitalized in the books of accounts of the
applicants.

4.4 Building, clean rooms, plant, machinery and equipment (including for associated
utilities and R&D) shall be purchased / leased in the name of the applicant.

4.5 The value of building, clean rooms, plant, machinery, equipment and associated
utilities may be verified by the Nodal Agency.

4.6 The used / second hand / refurbished plant, machinery and equipment (including for
associated utilities and R&D) allowed under the Scheme shall have a minimum
residual life of at least 5 (five) years, at the time of transfer of assets, as per
Hazardous and Other Wastes (Management and Transboundary Movement) Rules,

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 2016, amended vide Ministry of Environment, Forest and Climate Change
Notification dated 11.06.2018.

5. Nodal Agency

5.1 The Scheme shall be implemented by a Nodal Agency as mentioned in Para 9.1 of
the Scheme. For carrying out activities related to the implementation of the Scheme,
Nodal Agency would inter-alia:

5.1.1 Receive the applications, issue acknowledgements, and verify eligibility of the
applicants for support under the Scheme. Till such time that the Nodal Agency
is established, Ministry of Electronics and Information Technology (MeitY) will
receive the applications and carry out the further process.

5.1.2 Empanel agency(ies) or consultants as deemed necessary to carry out

technical and financial appraisal of the projects as well as evaluate expertise
of the applicants in these niche areas of Compound Semiconductors / Silicon
Photonics (SiPh) / Sensors (including MEMS) and semiconductor packaging.

5.1.3 Examine claims eligible for disbursement of fiscal support under the Scheme
and disburse the fiscal support as per eligibility.

5.1.4 Submit periodic reports to Ministry of Electronics and Information Technology

(MeitY) regarding the progress and performance of the Scheme.

6. Application

6.1 The Scheme shall be open for receiving applications initially for a period of Three
Years starting 01.01.2022. Tenure of the Scheme may be extended with the
approval of Minister of Electronics and Information Technology (MEIT). The Scheme
may also be reopened for applications anytime during its tenure with the approval of
Minister for Electronics and Information Technology.

6.2 An application shall be made in the format provided in Annexure of the Guidelines.
On receipt of an application in the prescribed format, the nodal agency shall conduct

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 an examination as to whether the application prima facie meets the criteria under
the Scheme.

6.3 For an application which prima facie meets the criteria, the nodal agency shall issue
an acknowledgement of receipt of the application. This acknowledgement shall not
be construed as approval under the Scheme.

6.4 There is no restriction on any applicant from making multiple applications and / or
for multiple locations.

7. Approval

7.1 Evaluation of the Applications by Nodal Agency: The applicants will be evaluated by
the Nodal Agency through a process of technological and financial appraisal. This
shall include technology parameters such as process technologies, project
implementation capacity, operation capability, etc. as well as financial parameters
such as fiscal support sought from the government, funds raised for the project etc.
The evaluation criteria and weightage for technological and financial appraisal shall
be decided by Ministry of Electronics and Information Technology (MeitY) in
consultation with Nodal Agency and approved by the Minister of Electronics and
Information Technology (MEIT).

7.2 Recommendations by Nodal Agency: The applicant(s) selected after evaluation

shall be forwarded by the Nodal Agency to Ministry of Electronics and Information
Technology (MeitY).

7.3 Determination of Fiscal Support for Applicants: Based on recommendations of

the Nodal Agency, Ministry of Electronics and Information Technology (MeitY) shall
determine the quantum of fiscal support to be provided to the selected applicant(s)
under the scheme.

7.4 Approval of Applicant(s) by Competent Authority in Ministry of Electronics

and Information Technology: The selected applicant(s) will be placed by the
Ministry of Electronics and Information Technology (MeitY) for approval by the
Competent Authority. After the approval is accorded by the Competent Authority,

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 these will be forwarded by the MeitY to the Nodal Agency for communication to the
applicant(s).

8. Claim for Fiscal Support

8.1 Claim for fiscal support may be submitted by the applicant on a quarterly basis.

8.2 The Nodal Agency may seek any documents, certificates, etc. during the process of
verification from the applicant.

8.3 The quantum of fiscal support payable for the project would be assessed based on
eligible capital expenditure / investment as communicated in the approval given to
the applicant by the nodal agency.

8.4 At the time of filing claim for fiscal support, the applicant would be required to provide
details of expenditure incurred towards the approved project / unit for which the fiscal
support is being claimed. The broad items of expenditure shall be in line with such
items under eligible capital expenditure / investment as mentioned in the approval
given to the applicant by Nodal Agency.

8.5 Disbursement of fiscal support shall be within the amounts for each item under
eligible capital expenditure / investment as per the approval given to the applicant
by the Nodal Agency. Any variation in expenditure pertaining to approved eligible
capital expenditure / investment item due to exchange rate variations, technology
upgradation, and change in specifications of Building, Plant, Machinery and
Equipment shall be allowed even if it leads to variation of expenditure within
individual eligible capital expenditure / investment items, as long as the total actual
expenditure is within the overall approved eligible capital expenditure / investment.

8.6 The Nodal Agency shall have the right to carry physical inspection of an applicant’s
manufacturing units and offices through site visits for purpose of verification of
claims.

8.7 In case of doubt with respect to the eligibility of any capital expenditure / investment
that is mentioned in the claim for fiscal support, the Nodal Agency may refer the

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 matter to the Ministry of Electronics and Information Technology (MeitY) for
clarification. The decision of the MeitY shall be final in this regard.

9. Disbursement of Fiscal Support

9.1 The disbursement of fiscal support shall be carried out by the Nodal Agency.

9.2 The fiscal support against the eligible capital expenditure / investment shall be
released after the approval of the claim for fiscal support by the nodal agency,
subject to compliance to other terms and conditions stipulated in the Scheme /
Guidelines / Approval Letter.

9.3 The disbursement of fiscal support may be in the form of Direct Bank Transfer on
reimbursement basis.

9.4 In the event of disbursement of excess claim, the applicant shall reimburse the nodal
agency for any fiscal support amount refundable.

9.5 The Nodal Agency shall furnish information to Ministry of Electronics and Information
Technology (MeitY) with details of claims received for fiscal support, claims
approved, amount disbursed, and reasons for rejection / delay in disbursement of
the fiscal support on monthly basis.

9.6 The Nodal Agency shall submit budgetary requirements to the Ministry of Electronics
and Information Technology (MeitY) as a consolidated amount on regular basis and
not on project-by-project basis. MeitY shall make budgetary provisions for disbursal
of fiscal support to approved projects under the Scheme. Any excess / shortfall of
funds for release of fiscal support would be intimated by the nodal agency to MeitY
well in advance for smooth implementation of the Scheme.

9.7 The nodal agency shall submit monthly reports to the competent authority about the
progress and performance of the Scheme.

9.8 The fiscal support against the eligible capital expenditure / investment shall be
released after the approval of the claim for fiscal support by Nodal Agency, subject
to capital expenditure / investment meeting the minimum threshold value and

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 commencement of commercial production, and compliance to other terms and
conditions stipulated in the Scheme / Guidelines / Approval Letter.

10. Other Support:

10.1 Support for Development of Infrastructure / Common Facility Centres:

Government of India may extend the benefits of Modified Electronics Manufacturing
Clusters (EMC 2.0) Scheme for development of infrastructure / Common Facility
Centre subject to the proposal satisfying the EMC 2.0 framework requirements.

10.2 Compound Semiconductors / Silicon Photonics / Sensors Fabs and ATMP / OSAT
units set up in India will be supported through purchase preference in procurement
of electronic products by the Government under the Public Procurement (Preference
to Make in India) Order 2017.

10.3 Support for R&D, Skill Development and Training: The Nodal agency shall
prepare a roadmap for R&D, Skill Development and Training for the development of
Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor
Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India in
consultation with the approved applicants.

11. Related Party Transactions (RPT)

11.1 For any expenditure forming part of the claim for fiscal support which involves
purchase / lease from Group Companies / 'Related' entities, relevant certificate /
documents (for domestic and / or international procurement) must be provided by
the applicant. This shall be submitted in accordance with the provisions of
Companies Act, Income Tax Act and Accounting Standard as applicable and
amended from time to time.

11.2 In case, any expenditure value is revised based on an assessment done

subsequently as per provisions of the acts as cited above, the applicant shall notify
and reimburse the Nodal Agency immediately for any incentive amount disbursed
over and above the revised value as per subsequent assessment along with the

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 interest calculated at 3 years SBI MCLR (as applicable on the date of disbursement)
compounded annually.

12. Review and Impact Assessment

12.1 Periodic reviews of approved applicants will be undertaken by the Nodal Agency
with respect to their investments, production, employment generation and value
addition under the Scheme.

12.2 All approved applicants shall be required to furnish self-certified Monthly Review
Reports (MRRs) within 10 days from the end of each month till five years or till the
time the fiscal support is being drawn, whichever is earlier.

12.3 Mid-term appraisal of the Scheme will be carried out after two years of its
implementation or as per the recommendation from Ministry of Electronics and
Information Technology (MeitY) to assess the impact of the Scheme, off take by the
approved applicants and economy in terms of the stated objectives. Based on such
impact assessment, a decision may be taken to increase the tenure of the Scheme
and change its financial outlay with the approval of Minister of Electronics and
Information Technology (MEIT).

13. Residual

13.1 Any change / deviation in the location of a project / unit, after filing the application
and before approval of the same, shall be allowed by the Nodal Agency after due
verification of application of capital expenditure / investment at the changed location.

13.2 Any deviation with respect to approved eligible capital expenditure / investment, after
approval of the project, shall be intimated by the Nodal Agency to the Ministry of
Electronics and Information Technology (MeitY). In case of reduction of the eligible
capital expenditure / investment, the Nodal Agency will give the revised approval to
the applicant. In case of escalation of the eligible capital expenditure / investment,
the Nodal Agency will seek approval of the competent authority in the MeitY. Based
on the competent authority’s recommendation, the Nodal Agency shall communicate
the revised approval.

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13.3 An applicant shall intimate the Nodal Agency of any change in the shareholding
pattern of the Promoters’ holding in the Applicant / Project, including any change in
encumbrance, post application and during the period of 5 years from the date of
acknowledgement.

13.4 In case of a successor-in-interest, the capital expenditure / investment undertaken

by the applicant and the successor-in-interest, would be considered for determining
eligible capital expenditure / investment, subject to recommendation and compliance
with any other condition stipulated by the Nodal Agency, as may be deemed
appropriate. The earlier capital expenditure / investment and eligible capital
expenditure / investment for the successor-in-interest shall be the same as
determined for the applicant to whom approval was accorded under the Scheme.

13.5 Units receiving fiscal support under the Scheme shall have to remain in commercial
production for a period of at least 3 (three) years from the date of commencement
of commercial production or 1 (one) year from the date of receipt of last fiscal
support, whichever is later, and provide an undertaking for the same.

13.6 In the event of default or closure of an applicant unit that has availed under the
Scheme before the period as mentioned in Para 13.5 above, the applicant unit shall
be required to refund the support disbursed, failing which, recovery shall be done
from the liquidated assets of such unit as per established procedures.

13.7 The applicants shall also be eligible to take benefit under any other Scheme(s) of
Government of India. However, investments committed by the applicants under
SPECS Scheme for which fiscal support have been claimed shall not qualify as
eligible capital expenditure / investment under the Scheme for setting up of
Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor
Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India.

13.8 Fiscal Support, offered by the State Governments or any of its agencies or local
bodies shall be over and above the fiscal support of the Scheme.

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13.9 To obviate any malpractices in the financial matters where disbursements are made
to industry by the Government, it has been decided to provide a deterrent against
corrupt practices for promotion of transparency and equity. Therefore, keeping in
view the sensitivities involved in the process and taking cue from the instructions of
the Central Vigilance Commission regarding adoption of an Integrity Pact in the
matter of procurement, the Nodal Agency shall obtain undertaking(s) from applicants
under the Scheme.

13.10 Supplementary Guidelines may be issued from time to time for the smooth
implementation of the Scheme.

*****

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 Annexure
Application Form

1. Introduction

1.1. The application shall be duly signed by authorized signatory of legal entity.

1.2. Applicants are advised to follow the format provided in this template for submitting their
applications. Applicants are requested to provide information and enclose all supporting
documents as detailed.

1.3. All applications shall be submitted through an Online Portal to the Nodal Agency notified
under the Scheme. A non-refundable application fee of INR 5,00,000 (Rupees Five Lakhs
Only) would be payable for each application.

1.4. Applicants may go through the Guidelines carefully before filling up the details in the
application.

1.5. Application has been divided into the following sections and sub-sections:

1.5.1. Applicant Details

1.5.2. Detailed Project Report

Section I – Applicant Details

1. Company Information

1.1. Name of the company, incorporation details

Documents to be furnished:

a) Brief Business profile

b) Certificate of incorporation

1.2. Company Structure (entity) under which the project is to be undertaken (legal
status, shareholding pattern and details of relevant agreements which might have been

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signed with business partner(s), if any). The agreement and roles and responsibilities
between the partners must be clearly mentioned

Documents to be furnished:

a) Certified copy of the memorandum and articles of association or equivalent

registration document

b) Shareholding pattern (latest submitted with ROC and certified by Company

Secretary)

1.3. Details of Authorised Signatory

Documents to be furnished: Letter of Authorization by Board of Directors or Managing

Director or equivalent.

1.4. Company Details: Address, phone, email, nature of current business, external
credit rating.

1.5. Details of current manufacturing facilities in India and abroad.

1.6. Credit History: Details of presence in RBI’s Defaulter and Wilful Defaulter
Lists, SEBI Debarred List. CIBIL Score and International Credit Rating, if borrowings are
taken from foreign countries.

Documents to be furnished: Certificate from Company Secretary/ Board of Directors

for Defaulter’s List.

Section II – Detailed Project Report

a. Project Summary

b. Technology Specifications

i. Technology

ii. Target products and applications

iii. Proposed Installed capacity

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 iv. Technology Partnerships – Details of technology partner(s) with
relevant documents

c. Proposed Location

d. Project Financials

i. Total project cost including working capital requirements

ii. Sources of fund

iii. Ownership structure

iv. Projected P&L for atleast 20 years

v. Key financial indicators (IRR, ROCE, ROI, EBIDTA, NPV)

e. Operational Details

i. Land, water and power requirements

ii. Ramp-up timelines

iii. Management structure

f. Human Resources: Availability and Requirement of trained manpower,

plan for training and skill development

g. Capital Goods: Requirement of new / refurbished capital goods

h. Raw Material: Details regarding sourcing of raw materials, plan for

developing the raw material manufacturing ecosystem in India.

i. Market Assessment of Proposed Products

j. Roadmap for Technology Upgradation

k. Plan for R&D Collaboration with Indian academic institutions

l. Regulatory Treatment

i. Requirement of licenses, permits, clearances and third-party

approvals necessary to execute the project.

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 ii. Proposed timelines for obtaining such licenses, permits, clearances
and third-party approvals

Documents to be furnished:

a. Bank / FI appraisal note / report, if available

b. Sanction letter and the Term Loan Agreement for Debt.

c. Board Resolution for equity / unsecured loans for companies or equivalent

for other legal entities

d. Proof of equity / unsecured loans brought in as per project schedule.

e. Application Fee Details: Proof of the Application Fee Submission.

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