Fab sops rolled out for chip makers

NEW DELHI: Telecom minister Dayanidhi Maran on Thursday announced a capital subsidy of up to 25% to attract investments from global majors for setting up semiconductor fabrication and other micro and nano technology manufacturing units. With this move, investments of $6-9 billion in the near future appear a distict possibility.

The semiconductor policy had been approved earlier by the Cabinet, which will be operational till 2010. The subsidy offered is in the form of tax breaks and interest-free loans.

“A typical fabrication unit requires a minimum $3 billion investment. Our country has the eco system to absorb at least two-three such units,” he said. Semiconductor firms eager to invest a minimum of Rs 2,500 crore, can get a benefit of 20% of capital expenditure during the first 10 years, if located in a SEZ. If its outside, the benefit is 25%, with countervailing duty on capital goods also been removed.

The threshold investment limit for manufacturing products like storage devices, micro and nano technology products, assembly and testing of all these products and Organic Light Emitting Diodes is Rs 1,000 crore.

The policy comes late, long after the world’s largest chip maker Intel turned its back on India to invest in Israel. The incentives offered are for the manufacture of all semiconductors, displays including Liquid Crystal Displays, Plasma Displays as well as other such panels including solar cells and photvoltaics.

MAIT, the hardware industry association, welcomed the policy. Urging the states to frame investment-friendly policies for such companies, Maran said the Centre would support cluster technology which has done well in China. “Government has got good inputs from Investment Commission to create clusters. IT department will work with state governments to develop cluster technology,” he said.

“We have rolled out the red carpet and are welcoming firms to invest in India in semiconductors or other related products. There are many MNCs who are in talks with us.. they are eagerly waiting for this policy,” he said.