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The government on Thursday announced the semiconductor policy to encourage foreign investors to set up fabrication and other nano manufacturing industries in the country. The incentives will be for manufacture of all semiconductors, displays, storage devices solar cells, and other advanced micro and nano technology products.
The subsidy will be 20 per cent of the capital expenditure during the first 10 years for units located in SEZs and 25 per cent for those outside. The threshold for investments will be Rs 2,500 crore for semiconductor products and Rs 1,000 crore for other products.
The Cabinet had given in-principle approval to the policy this January. Announcing the policy today, IT Minister Dayanidhi Maran said the country can expect over $10 billion of FDI in the industry. “A typical fab requires a minimum $3 billion investment. Our country has the eco-system to take two-three such plants,” he said.
Industry experts say the move will enable India to graduate from the current assembly-oriented operations to competitive manufacturing . “The policy will provide an impetus to the sector, the electronics industry and the overall eco-system,” said Poornima Shenoy, president of India Semiconductor Association. “The domestic market for electronics goods is expected to reach $363 billion by 2015 and the domestic demand for semiconductors alone will be $43 billion.”
The current world market for semiconductor manufacturing is $228 billion, of which India’s share is a minuscule 1 per cent.
“Considering that the market is growing at a rate of 9-10 per cent, India could have a 5 per cent share by 2015. With this policy, there are about 10-12 proposals, that will take off,” said Vinnie Mehta, executive director of Manufacturers Association for Information Technology.
Lack of a policy had led the world’s largest chipmaker Intel to turn its back on India and go to Israel for setting up a fab. Reacting to the news today, Intel said the company would respond once the comprehensive policy document was circulated.
“Compared to China, India has been a late starter, and it is good the government has realised the need for such a policy,” said B V Naidu, chief executive, SemIndia.
