Govt notifies chip policy, expects Rs 24,000 cr investment

By SiliconIndia   |   Thursday, 22 March 2007, 05:00 Hrs
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New Delhi: The government of India has finally notified the much awaited semiconductor policy for setting up fabs in India. They expect to house two-three fab units at an investment of $2-3 billion each by 2010 and attract investment of Rs24,000 crore in the next three years.

With the policy being notified, the government will reopen negotiations with many companies including Intel, the world's largest chip manufacturer who had been waiting for the semiconductor policy to take decisions on its India plans and had in the meantime selected Vietnam for a facility.

Announcing the policies providing capital subsidy to investors setting up chip manufacturing units in India, Minister for IT and Communications Dayanidhi Maran said, ?An appraisal committee to be headed by the Additional Secretary in the Department of IT will be formed very soon. The committee will receive expressions of interest from interested parties and will submit its recommendations to the government.?

The subsidy will be in the form of tax breaks and interest-free loans. The incentives will be 20 percent of the capital expenditure during the first 10 years, but companies have to invest a minimum Rs2,500 crore. Such units will have to be set up in special economic zones to avail this benefit. If the unit is located outside an SEZ, the incentive would be 25 percent of the capital subsidy in the first 10 years and countervailing duty on capital goods would be exempted. The threshold investment limit for manufacturing other products like storage devices, micro and nanotechnology products, assembly and testing of all these products and organic light emitting diodes is Rs1,000 crore.

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