 "No major takers for govt's fab project, the second time")
No major technology company has evinced interest in setting up semiconductor chip fabrication (fab) units in India, despite an extended window of opportunity to apply for the government-sponsored project. The Centre plans to subsidise fab units - a complex technology project costing upwards of Rs 25,000 crore - to the extent of 40 per cent and had given an in-principle approval to two consortiums in September 2013. It had also simultaneously opened the floor for others to come forward with their proposals.
According to two government officials, the Department of Electronics and Information Technology (DeitY) has received only two new proposals - one by Interactivity Group (supported by a group of IIT alumni) and another by APSTL, an Arizona-headquartered technology firm. Even though an empowered committee set up to evaluate all the proposals is still studying them, an official said it is unlikely something concrete will come out of the two new applications.
"The proposal by APSTL seems to be for an ATMP (assembly, test, mark and pack) facility, which is the next stage of a fab and nothing concrete has emerged yet from the Interactivity Group proposal," an official said. The official added the empowered committee was expected to take a decision by the end of this month, who requesting not to be identified. A lack of alternative players could bring the existing consortiums closer to final approval as entry of any new firm could have queered the pitch for them. Infrastructure company Jaypee Associates and home-grown chip firm Hindustan Semiconductor Manufacturing Corporation (HSMC) led the two existing consortiums.
Meanwhile, the official of an existing consortium partner said the government had assured them the proposals will be sent to the Cabinet for approval by the end of January. "It could be difficult for the poll-bound government to clear it after January," the official added.
Setting up the units is aimed at boosting domestic manufacturing. The units are expected to act as a catalyst for the components and equipment electronics industry. Currently, India imports most of its electronics needs because products are not made locally. According to the government estimates, by 2020, India would import electronic goods worth $300 billion, out of its total demand of $400 billion. India's electronics import bill could, thus, exceed that of oil.
However, a lack of interest the second time around as well underlines the concerns about the feasibility of setting up fab units in the country. Experts argue the long-gestation period and the technology mandates of the government may diminish the usefulness of the projects when they finally come up. The facilities are expected to start production only sometime in 2017.
Debjani Ghosh, South Asia managing director of chipmaker Intel, had recently told Business Standard in an interview that India's priority should be of getting the infrastructure right.
"In the long term, we have to make sure we have our own manufacturingunits but in the short-term, we have to work towards making it meaningful as a place to invest in. It is not just about giving sops, it is also about ensuring ease of business, a robust domestic market and a strong supply ecosystem. Once all of that is there, the government will not even have to work very hard towards attracting investment."
Under the current proposals, Jaypee has tied up with IBM and Tower Jazz and has proposed a facility in Greater Noida with an investment of Rs 26,300 crore, while HSMC has partnered with ST Microelectronics and Silterra and has planned its unit at Prantij near Gandhinagar in Gujarat with an investment of Rs 25,250 crore.
According to two government officials, the Department of Electronics and Information Technology (DeitY) has received only two new proposals - one by Interactivity Group (supported by a group of IIT alumni) and another by APSTL, an Arizona-headquartered technology firm. Even though an empowered committee set up to evaluate all the proposals is still studying them, an official said it is unlikely something concrete will come out of the two new applications.
"The proposal by APSTL seems to be for an ATMP (assembly, test, mark and pack) facility, which is the next stage of a fab and nothing concrete has emerged yet from the Interactivity Group proposal," an official said. The official added the empowered committee was expected to take a decision by the end of this month, who requesting not to be identified. A lack of alternative players could bring the existing consortiums closer to final approval as entry of any new firm could have queered the pitch for them. Infrastructure company Jaypee Associates and home-grown chip firm Hindustan Semiconductor Manufacturing Corporation (HSMC) led the two existing consortiums.
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Business Standard had reported on November 19 about Jaypee's corporate rival GMR Group's interest in the fab project. Another government official said while GMR had initially approached DeitY, it could not take the proposal forward for want of a technology partner. Both Interactivity and APSTL did not respond to email queries sent on Monday.
Meanwhile, the official of an existing consortium partner said the government had assured them the proposals will be sent to the Cabinet for approval by the end of January. "It could be difficult for the poll-bound government to clear it after January," the official added.
Setting up the units is aimed at boosting domestic manufacturing. The units are expected to act as a catalyst for the components and equipment electronics industry. Currently, India imports most of its electronics needs because products are not made locally. According to the government estimates, by 2020, India would import electronic goods worth $300 billion, out of its total demand of $400 billion. India's electronics import bill could, thus, exceed that of oil.
However, a lack of interest the second time around as well underlines the concerns about the feasibility of setting up fab units in the country. Experts argue the long-gestation period and the technology mandates of the government may diminish the usefulness of the projects when they finally come up. The facilities are expected to start production only sometime in 2017.
Debjani Ghosh, South Asia managing director of chipmaker Intel, had recently told Business Standard in an interview that India's priority should be of getting the infrastructure right.
"In the long term, we have to make sure we have our own manufacturingunits but in the short-term, we have to work towards making it meaningful as a place to invest in. It is not just about giving sops, it is also about ensuring ease of business, a robust domestic market and a strong supply ecosystem. Once all of that is there, the government will not even have to work very hard towards attracting investment."
Under the current proposals, Jaypee has tied up with IBM and Tower Jazz and has proposed a facility in Greater Noida with an investment of Rs 26,300 crore, while HSMC has partnered with ST Microelectronics and Silterra and has planned its unit at Prantij near Gandhinagar in Gujarat with an investment of Rs 25,250 crore.