Union Government approved two plant to manufacture Semiconductor chips

The Union Government approved the setting up of two plants to manufacture semiconductor chips in India on 14 February 2014. The plants will be set up by two business consortia, including Israel's Tower Jazz-IBM and STMicroelectronics at a cost of around 63412 crore Rupees.

One of the business consortiums consists of India's Jaiprakash Associates, IBM and Tower Jazz. It plans to set up a plant at a cost of 34399 crore Rupees near the Yamuna Expressway in Uttar Pradesh.

The other, which consists of France-based STMicroelectronics, HSMC Technologies (Hindustan Semiconductor Manufacturing Corporation) and Malaysia's Silterra, will set up a plant in Prantij in Gujarat at a cost of 29013 crore Rupees.

It is expected that the final agreements regarding both plants will be signed by August 2014.

The government has been working on a plan to reduce its costly import bill and manufacture some products, which are imported. The two plants are expected to help the country reduce its import bill by allowing manufacture of semiconductor chips locally.They will also create direct employment opportunities for around 22000 people and indirect opportunities for a lakh more.

The government is offering 25% subsidy on capital expenditure, tax breaks and 5124 crore Rupees to each plant as interest-free loans in a bid to attract chip makers.

The companies in the consortia will get all benefits listed under the National Policy on Electronics like Modified Special Incentive Package, which allows up to 10000 crore Rupees in benefits under the 12th Five Year Plan ending 2017.

They will benefit under section 35 AD of I-T Act and will also be allowed to deduct 100% expenditure made on research and development for development of electronic chips.

According to various estimates, India's demand for electronics products is slated to reach 400 billion dollars by 2020. Currently, it imports more than 90% of consumer electronic products and the imports are set to reach 300 billion dollars by 2020 from just 7 billion dollars in 2013.

Semi Conductor

• A material is neither a good conductor of electricity nor a good insulator. The most common semiconductor materials are silicon and germanium.
• Semiconductor is a hardware component, which is crucial to the functioning of various electronic devices such as, transistors, mobile phones, computers and hi-tech defence equipment.