Budget 2013 impact: Chip makers to gain from lower duty

BANGALORE: The electronics industry has this pet scare scenario that India’s electronics import bill could cross its oil import bill by 2020. Long-term estimates are always dicey in today’s volatile market, but there may be something in what the industry is trying to tell us.

India’s consumption of electronic products — PCs, PC accessories , mobile phones, tablets, TVs, set-top boxes and electronic systems in manufacturing plants — has been on the rise, and some 65 per cent of the products is imported. The finance minister appears to have understood this. He has announced measures that, together with the steps proposed in the National Electronics Policy released last year, will strengthen electronics manufacturing in India.

The FM has said he will provide incentives to semiconductor wafer fabrication facilities, including zero customs duty for plant and machinery (currently the duty is about 7 per cent).

India is a major global hub of semiconductor design, but has no modern , large-scale facility to manufacture chips. A fabrication facility requires at least $2 billion in investment, and require constant equipment upgrades. The FM’s incentives should make investments in them more viable.