Will Semiconductors be hot in coming years ?

Following are the statements issued by Govt of India

*Cabinet approves Semiconductor Policy : During a meeting held on 11th Jan/7, the Union Cabinet is understood to have approved the Semiconductor Policy seeking incentives to hi-tech companies proposing to set up chip manufacturing facilities in India. Cabinet gave its in-principle approval for giving special incentives to attract semiconductor companies to set up fabs in hi-tech areas, to be available till March 2010. The threshold limit, incentive package and subsidy will be worked out later by the Prime Minister's Office and the Cabinet Secretary.

*Govt may cut sops to chip units : In the final draft of the Semiconductor Policy to be announced in February 2007, the Central Government is likely to rule out upfront equity participation of 26% in upcoming semiconductor units and other general incentives, including zero interest loans of up to Rs.400 crore and an interest subsidy of 50% for 10 years. The revenue department is of the view that an upfront equity participation of 26% would have a financial implication of around 1,100 crore, Rs.200 crore for zero interest loans and Rs.250 crore for interest subsidy.

*Chipmakers set to get fiscal catalyst : The government, in a special incentive package for semiconductor fabrication, has proposed providing a fiscal incentive of 25% of the capital expenditure incurred during the first 10 years of a project. This could be in the form of the government picking up to 26% equity in the project or providing investment grants, tax credits or interest subsidy. According to the set of incentives proposed, the threshold level for investment in manufacture of hi-tech products other than semiconductors would be Rs.1,000 crore. The proposal is likely to be placed before the Cabinet soon.

*Fab policy may extend fiscal incentives to all : The government is planning to revise the draft Fab Policy to extend fiscal incentives to other hi-tech products such as LCDs, organic light-emitting diodes (OLED), plasma panel displays, storage devices and solar cells. It is proposed that the fiscal incentive package being mooted for the semiconductor industry should also be extended to other hardware activities along with semiconductors to make the country a hi-tech hardware hub. The changes are epected to be included in the new Fab Policy for which the Department of IT has moved a cabinet note, which also have favoured to grant fiscal benefits for the development of nano technologies. The DIT draft note to the cabinet is also reported to have suggested to review all other existing and developing IT-related products, along with semiconductors, for grant of fiscal incentives.

*Chip policy in 10 days : According to IT Ministry officials, the much awaited semiconductor policy is expected to be out in ten days. The policy is reported to be in its final stage and things are moving forward(11/01/07).

*Fab Policy to be placed before the Cabinet for approval : In a bid to boost the semiconductor and nano technology sectors in the country, the government is planning to extend a host of fiscal incentives including benefits at par with SEZ units and application of lower cenvat rate of 4%. The Finance Ministry, which is evaluating the scheme of fiscal incentives to be included in the Fab Policy, has agreed to extend incentive schemes applicable to SEZ units to semiconductor industry too. The FM has, however, toned down a proposal from the IT Ministry to reduce cenvat rate to 4% for the entire industry agreeing to restrict the sop only to high-tech areas. The FM has also agreed to look into a proposal to extend income-tax and excise benefit to semiconductor units at par with those available in special category states such as Uttaranchal and Himachal Pradesh, while turning down IT Ministry's request to give grants to the units for R&D activities. Though IT Ministry has sought depreciation of 100%, FM and Planning Commission are of the view that instead of giving 100% depreciation benefit in the first year itself, the same should be offered at 33% each for three consecutive years with unlimited loss carry-forward facility.

*Chip units likely to get package of incentives : The proposed package of incentives for the semiconductor industry, pushed 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 details. The reconsideration of the package for the semiconductor industry follows a strong plea by the IT 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

*New Semiconductor Policy - PMO wants incentives restricted to 25% of total capital expenditure : The semiconductor policy proposed by the Department of Information Technology is set to be re-worked, with the Prime Minister's Office directing that incentives under it be restricted to 25% of the total capital expenditure

*New Semiconductor Policy soon : Maran : After discussion with a delegation of the Taiwanese Semiconductor Association 9n 28th Aug/06 in Chennai, the Union IT and Communications Minister, Mr. Dayanidhi Maran told reporters that a new policy to cater to the needs of the Semiconductor Policy, which has already been submitted to the Finance Ministry, is expected to be unveiled soon. According to the Minister, the consumption of semiconductors in the next 7-8 years in India will be $33 billion while the finished product market will be $360 million.

*Chip units to get SEZ-like sops sans export obligation : To attract electronic hardware manufacturing giants like Intel, AMD and ST Microelectronics to India, the Finance Ministry is likely to offer them fiscal concessions akin to those given for SEZ, but without any export obligation as SEZ units, an announcement for which is expected to be announced by the Finance Minister shortly. The package prepared by the Finance Ministry would allow manufacture of semiconductor fabrication, including chips, wafers and fabs as also plasma panel displays and flat LCD/OLED, qualify for the SEZ-like sops. While SEZ units require to report net forex positive position within five years of commencement of commercial operations, electronic hardware manufacturers would get the concessions without any such obligation.

*Semiconductor Industry to get policy boost soon:IT Minister : The Union Minister for Communications & IT, Mr. Dayanidhi Maran, while inaugurating STPI's 'Cyber Park' in Bangalore on 2nd June/06 said that the Department of IT is in the final stages of preparing a draft policy to promote the growth of Semiconductor Industry in India. According to Mr. Maran, the policy would propose special package of incentives for the semiconductor industry such as fabs, assembly and testing units, solar cells, flat panel displays, storage devices etc. The Minister further said that the policy, "along with a proactive and industry-friendly hardwasre policy would make the Indian electronics and IT hardware manufacturing industry globally competitive and ensure more inflow of investments including FDI into this sector". During the foundation stone ceremony of the $3 billion 'Fab City' project for the country's first semiconductor manufacturing hub near Hyderabad, the IT Minister stated that the demand for electronics consumoton will touch $350 billion by 2015 with India needing to import $40 billion worth semiconductor components

*New policy for electronic industry soon : The Central Government plans to unveil a new policy for promoting semiconductor and electronic industries in the country. The objective is to make India an hub for manufacturing flat screens, monitors and chips, besides LEDs amongst others. And to tap this emerging potential, Union Minister for Communications & IT, Mr. Dayanidhi Maran will lead a delegation to South Korea in mid-June to convince electronic majors such as Samsung and LG to invest in India, who are showing keen interest in investing in Southern India

*IBM to set up semiconductor R&D Centre in Bangalore : IBM, the global technology giant is setting up research centre, to be called 'Semiconductor Research and Development Enablement Centre' in Bangalore. This will be its sixth centre globally and the first outside US and Europe. This is part of system and technology group of IBM which develops and manufactures advanced semiconductor and interconnect technologies.

*Hardware Policy soon : PM : After inaugurating the manufacturing facility of Flextronics in Sriperumbudur recently, Prime Minister Manmohan Singh announced that the Centre will soon come out with an electronics and IT hardware policy to get major fillip to the industry and make it more competitive. PM said that the Centre would follow a forward-looking policy regime that would continue to encourage the electronics and IT hardware sector and promote new investment, create new empoloyment and generate new business opportunities. This will propmote greater competition, which, in turn, will help the development of the domestic electronics industry.