Semi-conductor units to get tax incentives

NEW DELHI: The proposed incentives package for the semi-conductor industry, put on the backburner following the finance ministry’s rejection, has been revived.

The finance ministry conducted a detailed meeting on the sops that could be provided to the industry and a final decision is expected after finance minister P Chidambaram looks into the details. The reconsideration of the package for semi-conductor companies follows a strong plea by information technology minister Dayanidhi Maran about the employment generation and economic activity creation potential of the segment. The package is aimed at attracting global giants like Intel to set up shop in India.

The Prime Minister’s Office (PMO) had earlier suggested that the finance ministry and the IT department should sort out the issue. The issue went to the PMO after the finance ministry rejected the package demanded by the industry. According to government sources, the package for the semi-conductor segment is likely to finally materialise in a toned-down form as compared to the original set of demands put forward by the Indian Semiconductor Association (ISA).

The Andhra Pradesh government is also strongly pushing for the package since it will boost the proposed FabCity project near Hyderabad, they added.

According to ISA, the government should work out a $1.5-bn package for the industry so that global giants could be attracted here. The total cost would be spent over a period of three years and this includes tax exemptions, infrastructure support and the government’s equity participation in the FabCity project.

Representatives of the semi-conductor industry have said that the proposed sops would help in attracting FDI of nearly $15bn in five years and $50bn in 10 years.

The cost of setting up one fab unit is estimated at around $3bn. The growth of this industry is expected to be far faster than the IT industry, both in terms of economic activity as well as employment creation.