No plan for chip-making yet
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No plan for chip-making yet

By SiliconIndia   |   Thursday, 27 December 2007, 12:40 Hrs
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New Delhi: The government's fab policy, with a sop to chip-manufacturing in India, has not quite hit its target, reported The Economic Times. None of the $6.2 billion worth proposals received by the government after the announcement of the policy is for setting up chip-making. In fact, SemIndia, which had announced plans to set up a $3 billion chip-making facility in Hyderabad, has not yet submitted its proposal.

"SemIndia has not approached us with any formal proposal," said a senior official at the department of IT (DIT). An e-mail questionnaire sent by ET to SemIndia CEO Vinod Agarwal didn't elicit any response.

DIT has so far received three proposals under the fab policy, including the one for the first ever LCD panel unit in India to be set up by Videocon at an investment of $1.8 billion. The other two are for photo-voltaic cell manufacturing units by Moser Baer ($3.2 billion) and Titan Energy Systems ($1.2 billion). The department has also received 14 enquiries, of which four are pertaining to chip-manufacturing.

Under the semiconductor policy, a company investing a minimum of $550 million for a fab unit and $220 million for other products like micro and nano-technology products would be eligible for government incentives up to 20 percent of the capital expenditure during the first 10 years if the unit is located inside an SEZ, or 25 percent if located outside. The government plans to offer fiscal incentives to two to three semiconductor units and about 10 eco-system units under the policy.

In October, Agarwal of SemIndia said that the company would submit its proposal to avail of the incentives within a month, while expressing disappointment with the policy guidelines stipulating companies to make the entire investment upfront, with the government picking up 20 to 25 percent equity in the project later. "It's not a good guideline. Anticipating investments first and then, giving incentives doesn't do much to build investor confidence," he said.

Agarwal had also expressed concern over the lack of infrastructure and the slow process. The policy was announced in February this year and the guidelines were outlined in September. Venture capital firm Sandalwood Partners and electronics manufacturing services major Flextronics are investors in the chip-making venture. SemIndia had started work on a $100-million assembly-testmark-pack (ATMP) facility in Fab City in Hyderabad, which is expected to be ready by the end of 2008.

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