News
India Outlines Semiconductor Special Incentive Package
Published: 23 April 2007
by Staff
BANGALURA, INDIA – India's semiconductor manufacturing policy has been announced, paving the way for India to make its mark on the global market. The Special Incentive Package Scheme focuses on attracting investments for setting up semiconductor plants and other technology manufacturing industries in the region. Semiconductor companies seeking incentives—20% of the capital expenditure during the first 10 years —will have to invest a minimum $550 million, according to the initiative.
The emerging growth of the Indian electronics equipment hardware market is expected to accelerate rapidly, according to venture capitalists and leading U.S. chip companies. As a result, India is keen to attract electronics manufacturers, especially semiconductor makers, to the region.
According to the document, participating companies will be required to set up in Special Economic Zones to qualify for special tax incentives and tax holidays. The subsidy will be in the form of tax breaks and interest-free loans.
The threshold investment limit for manufacturing products such as storage devices, micro and nano-technology products and organic light-emitting diodes, as well as assembling these products, has been set at $220 million. If located outside the zones, incentive would total 25% of the capital subsidy for the first 10 years.
The policy will extend through 2010. IT minister Dayanidhi Maran said India should expect more than $10 billion in foreign direct investment.
A recent study by ISA and Frost & Sullivan suggested the country would use $36 billion worth of semiconductors in 2015, and that the industry would become one of the largest employers, creating 3.6 million direct jobs and an additional 5.6 million related jobs.
More specific details about the level of equity, the interest-free component and other financial details will be revealed in two weeks.
