Semiconductor policy dilution to harm sector

There is a growing list of firms eagerly awaiting the much delayed semiconductor policy and any dilution of its content will hamper not just investments but also thousands of job opportunities, according to the India Semiconductor Association (ISA), the representative body of semiconductor firms in the country.

ISA has been lobbying hard for years for the policy, modelled on the lines of Israel's policy.

"It is a forward looking policy, which will open window of opportunities to India. If the policy is not delivered in full strength, it is not good having a policy. Many firms have held back their investment announcements waiting for the policy," said ISA Chairman Rajendra Kumar Khare.

Last month, the Union Cabinet gave in-principle approval to the policy, which included a combined 25 per cent subsidy and tax incentives on the capital expenditure in the first 10 years of a fabrication plant.

However, the subsidy component is now being examined by a Group of Ministers owing to the huge financial implications involved. The Centre has announced that the policy will be out before the budget.

"We are seeking one-time investment to support semiconductor manufacturing. We are urging the government to set aside Rs 10,000 crore for this purpose. Three years down the line, this sector will pay back Rs 40,000 crore through revenue and employment opportunities," Khare contends.

He pitches for semiconductor manufacturing strongly based on three factors "" the demand for electronic products in the country, the ecosystem and international market dynamics.

"The demand for electronics products in the country is expected to touch $155 billion by 2015. This will result in domestic demand for semiconductors to reach $36 billion by the same time. There is a clear case for meeting the requirement within India instead of banking on imports," he said.

He points out that India already has the necessary ecosystem for semiconductor manufacturing.

"We have emerged as the leader in semiconductor design, which is just the tip of the iceberg. We have the necessary ecosystem and talent. The only missing link is manufacturing for which we need the infrastructure. Though Taiwan and China are leaders in manufacturing, MNCs are looking for a third choice, which can be India," he added.