Incentives for high-tech manufacturers

By agencies   |   Wednesday, 01 March 2006, 20:30 IST
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NEW DELHI: In order to make India a preferred location for manufacturing compurter chips and other high-tech goods, the country is introducing new measures, Finance Minister P Chidambram said. The absence of large-scale semiconductor manufacturing in the country has been a weak spot in India's advancement as a center for high-tech development. Chidambram said, the government would assist high-tech manufacturing ventures with both equity participation and viability gap funding. The aim is to offset additional costs incurred by new ventures due to India's poor infrastructure. The incentives will be available for three years to accelerate investment in the sector. India's IT ministry will also soon announce a new policy to attract high-tech manufacturers to India, he added. Commenting on the Budget, the Indian Semiconductor Association’s Chiarmand and Managing Director of Broadcom Inc, Rajendra Kumar Khare said, “The measures announced are a step in the right direction. The measures would be a stepping stone to attract large foreign chipmakers, which typically expected the local government to participate in the cost of projects.” The viability gap funding would offset additional, extraneous costs incurred by new ventures due to the country's poor infrastructure, he added. Currently, the presence of large-scale chip manufacturer has so far elude India, even as it continues to expand its IT services, software development and other high-tech industries. Thought several big chipmakers, including Texas Instruments and Intel have chip design facilities in India, however they have been reluctant to set up fabrication plants in the country, in part because of the poor infrastructure. Semiconductor Complex, which is owned by the Indian government, operates a semiconductor fab with outdated process technologies and sub-optimal production scales. It has a 6-inch wafer fabrication facility capable of processing wafers using 0.8-micron manufacturing technology, far behind today's most advanced technologies. This facility is used primarily for pilot production runs of chips the company designs. India's minister of communications and IT, Dayanidhi Maran, met with Intel chairman, Craig Barrett, last year at the company's Santa Clara headquarters to persuade Intel to set up a test and assembly facility in India. However, the Indian government reportedly was not willing to share the costs of the Intel project. Intel has declined to comment on the matter.