Govt seeks new investors as JP pulls out of semi-conductor project

In Feb 2014, the Union Cabinet had approved two electronic chip manufacturing plants for a total of Rs 63,410 cr

With Jaiprakash (JP) Associates withdrawing its proposal to set up a Rs 34,000-crore electronic chip plant, the government is examining fresh investment proposals in the semi-conductor space, according to Aruna Sharma, secretary, department of electronics and information technology (DeitY).

“At present, we’re assessing the situation and after further deliberation we might look for a fresh set of investors in this space,” said another official.

In February 2014, the Union Cabinet had approved two electronic chip manufacturing plants for a total of Rs 63,410 crore. One of the semiconductor wafer fabrication manufacturing plants was supposed to be set up by JP Associates, with IBM and Tower Semiconductor of Israel as partners.
 

The debt-laden company has bowed out of the project, saying it’s not commercially viable.

The other firm, Hindustan Semiconductors, is still working on the project, said Sharma. This plant is being built by HSMC Technologies India, in partnership with STMicroelectronics, Europe's largest semiconductor maker, and Silterra Malaysia Sdn Bhd.

JP’s project was to be located along the Yamuna Expressway in Uttar Pradesh. According to DeitY, it would have had a capacity of 40,000 wafer starts per month.

“It is an important area for us strategically and as part of the Digital India initiative,” said a senior government official.

Electronic chips are a critical component of any modern electronic device and have security implications. At present, there are no semiconductor plants in India.

The government had earlier decided to provide incentives such as 25 per cent subsidy on capital expenditure, tax reimbursement, exemption from basic customs duty for non-covered capital items and 200 per cent deduction on expenditure on research & development.

The demand for electronic products in India is expected to rise 10 times to reach $400 billion by 2020.

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HOW IT UNFOLDED

• In Feb 2014, the Union Cabinet had okayed 2 electronic chip manufacturing plants for a total of Rs 63,410 cr
   
• One of the semiconductor wafer fabrication manufacturing units was supposed to be set up by Jaiprakash Associates, with IBM and Tower Semiconductor
  

 

The debt-laden firm has now bowed out of the project, saying it’s not commercially viable