Govt seeking more proposals.
The central government has approved setting up of two semiconductor wafer fabrication (FAB) manufacturing facilities to address the needs of fast growing domestic electronics market as well as the security concerns of the country,
The move is expected to boost investment in the semiconductor sector and provide job opportunities to 28 million people by 2020.
The first FAB facility that has been proposed by Jaiprakash Associates along with IBM (US) and Tower Jazz (Israel) at Greater Noida. The second one is by Hindustan Semiconductor Manufacturing Corporation (HSMC) along with ST Microelectronics (France/Italy) and Silterra (Malaysia) at Prantij, near Gandhinagar, Gujarat.
The outlay for the units is around Rs 26,300 crore and Rs 25,250 crore, respectively. The investment entails setting up the facilities to make 40,000 wafer starts per month of 300 mm size, using CMOS technology.
The nodes proposed for the first FAB unit are 90, 65 and 45 nm nodes in Phase I, 28 nm node in Phase II with an option of establishing a 22 nm node in Phase III and for the second FAB unit they are are 90, 65 and 45 nm nodes in Phase I and 45, 28 and 22 nm nodes in Phase II.
The government has also approved the incentive package for two consortia.
This package includes incentives already available under the Modified Special Incentive Package Scheme (M-SIPS) and deduction available for expenditure on R&D under the Income Tax Act.
In addition, FAB facilities will also be eligible for investment linked deduction under Section 35AD of the Income Tax Act. The government will provide viability gap funding in the form of an interest-free loan for a period of 10 years.
The government has also asked the technology providers to take equity of at least 10% in the proposed projects. It will also get 11% equity in the two projects.
The incentives details will, however, be worked out based on appraisal of detailed project reports to be submitted by the two consortia within a period of two months.
It would publish an expression of interest inviting proposals from other leading companies intending to establish FAB in India to be submitted in four weeks.
“We have atomic energy, space defence, power, all of these use chips. We have security consideration ... so it will serve our strategic purpose,” Union telecom minister Kapil Sibal said.
The government had constituted an empowered committee in 2011 to identify technology and investors and recommend incentives for setting up two FAB facilities in the country.
It submitted its recommendations to the government in March this year.
The semiconductor wafer FABs, when set up, will stimulate the flow of capital and technology, create employment opportunities, help higher value addition in electronics products manufactured in the country, reduce dependence on imports and lead to innovation, Sibal said.
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