Union to help boost Indian semiconductor market

India’s Union budget plans for 2011 may shed some positive light for the semiconductor sector.

That’s according to sources in the Department of Information Technology, who said that the plans could mean that the threshold limit of investment may come down for setting up semiconductor fabrication plants in India.

They claim that the government is planning to issue a revised budget following
recommendations from various bodies including manufacturers, Indian semiconductor Association (ISA) and Electronic Industries Association of India (ELCINA).

These sectors want to build on the draft of a new Special Incentive Package Scheme (SIPS), which was originally announced by the union government in 2007 and put in place to help raise the Indian semiconductor market, which according to analysts is still trailing behind the likes of China.

He told us: “India is strong on chip development. For example, Intel has an important design centre in Bangalore, but fabrication plants a different matter, compared China and Korea. That is partly down to infrastructure. Intel, for example, has a policy to replicate fabs exactly across the world.  The government has a scheme called Special Economic Zones (SEZ), but these don’t seem to attract semiconductor firms.

“There is a nascent semiconductor industry in Hyderabad, but not on any grand scale. No doubt, the Indian government, like other governments worldwide will offer tax incentives to chip companies.”

If it all goes ahead more investments could be made in semiconductor wafer fabs, as well well as plants that manufacture LCD, OLED, storage devices and solar cells with the help of bigger companies.

Poornima Shenoy, president, ISA, said, “It is not practical for small companies to invest such huge sums. We expect the recommendations given by us in this regard to be considered. The government should come out with an investment-friendly policy to invite foreign companies to come and set up operations in India.”