In a major boost to cut down on import of semiconductors, the government has approved plans to set up two chip-making facilities that will entail an investment of over Rs.25,000 crore.
Two consortiums, one led by JP Associates and other by Hindustan Semiconductors, have shown interest in setting up the plants, which received in-principle approval from the cabinet.
The Cabinet approved the plan despite objections by the Planning Commission, which was not in favour of giving concessions, which are estimated at over Rs 50,000 crore over the next 13 years. Officials, however, said that most of the concessions are already available under the policy.
The long-awaited decision to allow setting up of semiconductor manufacturing facilities would reduce imports, through which 80% of domestic requirements are met. The move is seen as part of a plan to reduce dollar outflow at a time when the economy is battling a record current account deficit, which has also impacted the rupee.
“Cabinet has given in principle approval for setting up of semi-conductor wafer fabrication manufacturing facilities,” I&B minister Manish Tewari told reporters.
The Cabinet has in-principle also approved that incentives that will be given to the two proposals, will also be offered to other players, who are interested in setting up semiconductor plants.
Jaiprakash Associates has tied up with IBM and Israel’s Tower Jazz, while Hindustan Semiconductor Manufacturing Corporation (HSMC) has tied up with ST Microelectronics and Malaysia’s Siltera to set up two chipmaking facilities.
Jaiprakash-IBM facility, with an investment of Rs 26,300 crore, will come up in Greater Noida and the HSMC-led consortium will invest over Rs 25,000 crore in Gandhinagar, Gujarat.
A day after the Cabinet cleared a package to boost chip-making in India, communications and IT minister Kapil Sibal said the government will offer tax breaks and interest-free loans. He said the manufacturers can avail of benefit under the I-T Act where their capital investment can be set off against profits. And, the government will give interest free loan, with a provision to convert a part of the loan to equity in the venture, subject to a cap of 11% stake in the same.
These new benefits are in addition to other incentives already available under the modified special incentive package scheme (M-SIPS) and deductions for research and development under the Income Tax Act. Based on these incentives, two joint ventures are soon going to set up fab manufacturing facilities in India.
“India needs to reduce dependence on foreign chips for security purpose. Being a capital intensive sector with long gestation period, certain incentives were needed to attract manufacturers here and to make India a world leader in chip fabrication. Manufacturers were asked about concessions they would be looking at. Expression of interest was sent to 33 companies and 16 responded, with two sending firm proposals. We have agreed with their suggestions and got Cabinet nod for the same,” Sibal told reporters.
“Indian IT Sector is going to move from IPV4 to IPV6, under which all gadgets like ACs, mobiles and cars are going to be lined through chips. Value of chips is roughly worth 25% of the total product’s cost. If India has its own design and manufacturing control on chips, it can be the world leader in the field of intellectual property,” Sibal said.
Government offers tax breaks and interest-free loans to attract global semiconductor wafer (chip) fabricators
The government expects the sector to generate 28 million jobs, directly and indirectly, by 2020
Two consortiums, one led by JP Associates and other by Hindustan Semiconductors, have shown interest in setting up the plants, which received in-principle approval from the cabinet.
The Cabinet approved the plan despite objections by the Planning Commission, which was not in favour of giving concessions, which are estimated at over Rs 50,000 crore over the next 13 years. Officials, however, said that most of the concessions are already available under the policy.
The long-awaited decision to allow setting up of semiconductor manufacturing facilities would reduce imports, through which 80% of domestic requirements are met. The move is seen as part of a plan to reduce dollar outflow at a time when the economy is battling a record current account deficit, which has also impacted the rupee.
“Cabinet has given in principle approval for setting up of semi-conductor wafer fabrication manufacturing facilities,” I&B minister Manish Tewari told reporters.
The Cabinet has in-principle also approved that incentives that will be given to the two proposals, will also be offered to other players, who are interested in setting up semiconductor plants.
Jaiprakash Associates has tied up with IBM and Israel’s Tower Jazz, while Hindustan Semiconductor Manufacturing Corporation (HSMC) has tied up with ST Microelectronics and Malaysia’s Siltera to set up two chipmaking facilities.
Jaiprakash-IBM facility, with an investment of Rs 26,300 crore, will come up in Greater Noida and the HSMC-led consortium will invest over Rs 25,000 crore in Gandhinagar, Gujarat.
A day after the Cabinet cleared a package to boost chip-making in India, communications and IT minister Kapil Sibal said the government will offer tax breaks and interest-free loans. He said the manufacturers can avail of benefit under the I-T Act where their capital investment can be set off against profits. And, the government will give interest free loan, with a provision to convert a part of the loan to equity in the venture, subject to a cap of 11% stake in the same.
These new benefits are in addition to other incentives already available under the modified special incentive package scheme (M-SIPS) and deductions for research and development under the Income Tax Act. Based on these incentives, two joint ventures are soon going to set up fab manufacturing facilities in India.
“India needs to reduce dependence on foreign chips for security purpose. Being a capital intensive sector with long gestation period, certain incentives were needed to attract manufacturers here and to make India a world leader in chip fabrication. Manufacturers were asked about concessions they would be looking at. Expression of interest was sent to 33 companies and 16 responded, with two sending firm proposals. We have agreed with their suggestions and got Cabinet nod for the same,” Sibal told reporters.
“Indian IT Sector is going to move from IPV4 to IPV6, under which all gadgets like ACs, mobiles and cars are going to be lined through chips. Value of chips is roughly worth 25% of the total product’s cost. If India has its own design and manufacturing control on chips, it can be the world leader in the field of intellectual property,” Sibal said.
Government offers tax breaks and interest-free loans to attract global semiconductor wafer (chip) fabricators
The government expects the sector to generate 28 million jobs, directly and indirectly, by 2020
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