Chip sector seeks sops for mega projects

By agencies   |   Monday, 27 February 2006, 08:00 Hrs
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NEW DELHI: When the virtually non-existent semiconductor manufacturing market in India is showing signs of taking off in a big way, the India Semiconductor Association has approached the Government with a set of recommendations to encourage the industry, including a proposal for tax breaks to investors in mega projects.

Talking to media persons, Indian Semiconductor Assoiciation (ISA) Chairman, Rajendra Kumar Khare said, “The Government policies should encourage investments in semiconductor ventures by offering tax breaks.” He suggested that for every $100 invested in semiconductor projects, offering $30 worth of tax credit for adjustment against other tax liabilities could make it attractive for investors in these capital-intensive projects.

The apex body is also seeking a larger role for Indian public sector undertakings in funding of semiconductor manufacturing projects in the country. Khare said, “Large public sector companies have huge reserves and funding semiconductors ventures could be an avenue for investment. Such a move would not only ensure that the funds do not sit idle, but will also offer corporate income-tax breaks on these investments.”

It is for encouraging domestic value addition, by suggesting tax breaks in local indirect taxes. “We have proposed excise duty waiver on domestic value addition in products that use chips. This would encourage end box manufacturers to get components or chips sourced from the domestic market,” he added.
Thought the discussions are on with the government, hopes are high as government is going to come out with Budget during the week. "Unless the proposed measures are put on a fast track, India could lose a major opportunity in semiconductor manufacturing," he said.

Besides, the association is also asking the government to create $2272.72 million fund, for participating in creating Fab city infrastructures over the next three to five years. “The Government could participate in these projects by bringing in 26 percent as equity, while the investors could bring in the balance amount. The Government could dip into the fund to participate in such mega projects,” he said.

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