Budget 2012: Grant tax exemption to encourage fabless semiconductor companies, says FICCI

Building the domestic electronics industry is a very important item for national agenda, from security, self-reliance as well as future business potential.

By Agencies | Updated: Feb 17, 2012, 06.54 PM IST

NEW DELHI: Building the domestic electronics industry is a very important item for national agenda, from security, self-reliance as well as future business potential. Since the domestic industry has fallen behind in this sector and is importing several billions of dollars of products and equipment every year, there is an urgent need to take actions to stimulate the domestic electronics industry and build India brand by encouraging locally designed products for local and global markets. The following proposals are submitted in this regard:-

>> Allow deferred payment of excise duties on an interest free basis for a period of 5 years.

>> Sales made to Indian telecom operators should be given deemed export status.

>> Product development companies, which are registered R&D houses, should get 300% R&D credit for the purpose of income tax. Also, such companies should not be required to pay MAT.

>> Tax exemption and R&D Grants to encourage the fabless semiconductor companies for next 10 years.

>> Design is value add in fabless companies and policies have to be drafted with this in mind. SEZ is also not financially viable for fabless start-ups.

>> Government tenders should include a certain percentage of mandatory local intellectual property content. This will encourage the equipment manufacturers to use the ICs designed by Indian fabless companies. Government labs should actively encourage the local companies for their needs in Semiconductors.

>> Set up a seed fund to encourage entrepreneurs in the fabless semiconductor space and also actively invest in start-ups to create semiconductors for government projects such as low end laptops, e-passport, smartcards, etc.

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