New Delhi and Taipei have initiated talks on a possible agreement that would facilitate setting up chip manufacturing in India.

Bloomberg Quint in a report, quoting unnamed sources said that, “officials in New Delhi and Taipei have met in recent weeks to discuss a deal that would bring a chip plant worth an estimated $7.5 billion to India to supply everything from 5G devices to electric cars.

The report also said that India is currently studying possible locations with adequate water and manpower. Besides, the government is looking at providing financial support of 50 per cent of capital expenditure from 2023 as well as tax breaks, it added.

Also read: Taiwan threatens to take China to WTO over apple import ban

India has been importing semi conductor or chip until now. However as supply chain management of this key raw materials got severely impacted amid the Covid 19 pandemic, India is now trying to become a chip manufacturing hub.

Semi conductor or chip, as commonly known, is the most critical component required in any modern electronic gadget.

Sources said that there could be more South Korean and Taiwanese companies lining up to set up semiconductor manufacturing units in India.

According to Invest India– the nodal body under the Ministry of Commerce and Industry, facilitating fresh investment in the country, the country’s semiconductor demand at present, is valued around $ 24 billion but by 2025, the market is expected to touch $ 100 billion.

Also read: With help from Korea, can India become a global semi-condutor hub?

South Korea based multinational company Seoul Semiconductor has already announced that it would set up a research & development (R&D) facility in Haryana. Sources said that later the company is expected to start a manufacturing unit too.

Demand for semi-conductor has increased significantly with the rise in usage of mobile phones and computers. The advent of 5G technology will push demand further.