The Cabinet has approved setting up of two Semiconductor Wafer Fabrication (FAB) Manufacturing Facilities in India. These FAB units are to be set up by two business consortia, with the following broad project parameters:
(i) M/s Jaiprakash Associates Limited (with IBM, USA and Tower Semiconductor Limited, Israel as partners)
a) Project Cost: Rs 34,399 crore
b) Technology: 90/65/45/28 nm
c) Capacity: 40,000 WSPM
d) Location: Yamuna Expressway, Uttar Pradesh
(ii) M/s HSMC Technologies India Pvt. Ltd. (with ST Microelectronics and Silterra Malaysia Sdn. Bhd. as partners)
a) Project Cost: Rs 29,013 crore
b) Technology: 90/65/45/28/22 nm
c) Capacity: 40,000 WSPM
d) Location: Prantij, Gujarat
Letter of intent will be issued to the two consortia by March 31, 2014. The final agreements are expected to be signed by August 2014. The Empowered Committee has been authorized to take all decisions to implement the FAB projects in furtherance of the decision.
The proposed FABs will create direct employment of about 22,000 and indirect employment of about one lakh.
These FABs will have a big impact on the development of Electronics System Design and Manufacturing eco-system across the country. This will help set up a critical pillar required to promote Electronics System Design and Manufacturing in India. The Semiconductor Wafer Fabrication units when set up, will stimulate the flow of capital and technology, create employment opportunities, help higher value addition in the electronic products manufactured in India, reduce dependence on imports, and lead to innovation.
The following main incentives will be extended:
i. 25% subsidy on capital expenditure and tax reimbursement as admissible under Modified Special Incentive Package Scheme (M-SIPS) Policy.
ii. Exemption of Basic Customs Duty (BCD) for non-covered capital items
iii. 200% deduction on expenditure on R&D as admissible under Section 35(2AB) of the Income Tax (IT) Act.
iv. Investment linked deductions under Section 35AD of the IT Act.
v. Interest free loan of approx. Rs 5124 crore each. (Exact amount to be calculated on Detailed Project Report appraisal.)
Background
The Government had in 2011 constituted an Empowered Committee (EC) to identify technology and investors and to recommend incentives to be provided to set up two FAB facilities in the country. The Empowered Committee had issued a Global Expression of Interest inviting technology providers and investors to set up the FAB facilities. This Committee submitted its recommendations to the Government in March 2013. The Cabinet, at its meeting held on 12.9.2013, considered the recommendations of the EC and accorded ‘in-principle’ approval to the two consortia referred to above and to the package of incentives. The Cabinet also decided that all other FAB manufacturers may also be appropriately and fully apprised of the quantum of subsidy/other benefits/support being offered for establishing FAB facilities in India. Such manufacturers may be asked to indicate their interest / send their responses on specified parameters to the Department of Electronics and Information Technology (DeitY) within a period of four weeks.
As decided by the Cabinet, the second Expression of Interest (EoI) was published, which clearly specified the project parameters required as well as the package of incentives being offered by Government of India. 106 potential FAB manufacturers across the world were also directly addressed. No new proposal has been received for setting up of a FAB as per EoI requirements. The steps taken pursuant to the aforesaid Cabinet decision have doubly assured the transparency of the entire process and also ensured a level playing field.
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SC/SH
-PIB
Extension of Last Date of Submission of EoI-Setting up of Semiconductor Wafer Fabrication (FAB) Manufacturing Facilities in India
28(3)/2013-IPHW
November 5, 2013
The Government of India (GoI) has accorded “in principle” approval for establishing two semiconductor wafer fabrication (FAB) manufacturing facilities in India and has also decided to apprise all other semiconductor wafer fabrication manufacturers, of the quantum of subsidy/ other benefits/ support being offered.
The technical requirements, the structure of incentives, the requirement of equity structure and other terms are indicated in the format for Expression of Interest (EoI), available on this page for download. Entities fulfilling the requirements were required to respond in the prescribed format, within a period of four weeks. The last date for submission of Expression of Interest has been extended upto 1700 Hours (IST) on 25th November, 2013.
DEITY
2 chip plants worth Rs 63k cr okayed
NEW DELHI: The government on Friday approved the setting up of two plants to manufacture semiconductor chips in India by two business consortia, including Israel's Tower Jazz-IBM and STMicroelectronics at a cost of around Rs 63,412 crore.
Semiconductor is a hardware component, which is crucial to the functioning of various electronic devices such as, transistors, mobile phones, computers and hi-tech defence equipment. For instance, Tower Jazz manufactures electronic chips that are used in Apple's iPhones and Samsung's Galaxy smartphones.
One of the business consortiums consists of India's Jaiprakash Associates, IBM and Tower Jazz. It plans to set up a plant at a cost of Rs 34,399 crore near the Yamuna Expressway in UP.
The other, which consists of France-based STMicroelectronics, HSMC Technologies (Hindustan Semiconductor Manufacturing Corporation) and Malaysia's Silterra, will set up a plant in Prantij in Gujarat at a cost of Rs 29,013 crore, according to a government statement.
It is expected that the final agreements regarding both plants will be signed by August this year. The government has been working on a plan to reduce its costly import bill and manufacture some products, which are imported. The two plants are expected to help the country reduce its import bill by allowing manufacture of semiconductor chips locally. They will also create direct employment opportunities for around 22,000 people and indirect opportunities for a lakh more.
The government is offering 25% subsidy on capital expenditure, tax breaks and Rs 5,124 crore to each plant as interest-free loans in a bid to attract chip makers. The companies in the consortia will get all benefits listed under the National Policy on Electronics like Modified Special Incentive Package, which allows up to Rs 10,000 crore in benefits under the 12th Five Year Plan ending 2017. They will benefit under section 35 AD of I-T Act and will also be allowed to deduct 100% expenditure made on research and development for development of electronic chips. However, invitations for bids for the plants by the Department of Electronics and IT last year did not rake in more players except for the two consortia that were already in the reckoning to build the plants. It is estimated that these chip-making plants will have a huge impact on the development of electronics system design and manufacturing in the country.
According to various estimates, India's demand for electronics products is slated to reach $400 billion by 2020. Currently, it imports more than 90% of consumer electronic products and the imports are set to reach $300 billion by 2020 from just $7 billion last year.
-TOI
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