Equity aid holds up chip policy

More delays are likely before India can embark on its semiconductor chip manufacturing initiative.

This is because the department of information has decided to form an expert committee to decide the kind of assistance to be extended to interested companies.

As a result, it is unlikely that the recent announcements like the $3 billion each SemIndia-AMD consortium and the IEMC plan for wafer fabrication plants will take off in the near future.

Once the recommendations of the expert committee are received, the department will formulate a 'mega-fab' policy, which among other things will outline the kind of support the industry can expect.

"The entire process will be completed in the next two years," a government official told Business Standard.

Though the government had made some initial moves towards formulating a fab policy, the biggest roadblock to the effort is the demand of equity assistance from the consortiums.

Both SemIndia and IEMC have asked the government to provide 25 per cent of the equity component of the project and also set up a $1.5 billion fund for fabrication plants.

"The government is unsure about providing equity support to the projects. We are considering providing only infrastructure and no equity support to the projects," said the official.

While the SemIndia-AMD and IEMC announcements were made about three-six months ago, little progress will be made till the issue of equity support is solved.