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Cabinet Approves Creation Of Two Semiconductor Fabrication Units

The Cabinet has approved the setting up of two semiconductor wafer fabrication units in India, under National Electronics Policy of 2012. The facilities will be set up at a cost of Rs 63,412 crore and will create 22,000 jobs.

One fabrication facility will be set up along Yamuna Expressway in Uttar Pradesh by M/s Jaiprakash Associates Limited with technical suport from IBM, USA and Tower Semiconductor Limited, Israel. The second one will be set up in Prantij, Gujarat by M/s HSMC Technologies India Pvt. Ltd. with ST Microelectronics and Silterra Malaysia Sdn. Bhd. as partners.

Indian government had earlier proposed various incentives for companies that invested in electronics manufacturing in India under the Modified Special Incentive Package (M-SIPS). However, these fabs are not part of this programme and they will receive more incentives such as, exemption of Basic Customs Duty (BCD) for non-covered capital items, 200% deduction on expenditure on R&D as admissible under Section 35(2AB) of the Income Tax (IT) Act, investment linked deductions under Section 35AD of the IT Act and interest free loan of approx. Rs 5,124 crore each. This is over and above the 25% subsidy on capital expenditure and tax reimbursement as admissible under M-SIPS.

Other developments

Earlier this month, the government had announced that India’s first chip characterization lab will be set up in Bangalore in six months jointly by the Karnataka government, STPI and IESA. Such labs test a design to see if it meets its goals and is a process that happens before it is sent to the fab for manufacturing. The government had selected Bangalore-based Tessolve as the vendor to carry out this project, which will be based on the PPP model. Depending on the success of this lab, the government might set up a second one in Bhuvaneshwar.

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Progress on EMCs: The government had set up a corpus sum of Rs 30,000 crores to set up Electronic Manufacturing Clusters (EMCs). The government has received applications from several states and as per DeitY website there are 30 EMCs being set up across 13 states in India. However only the Bangalore facility has got the nod until now and the first brownfield EMC will be set up in Electronic City at a cost of Rs 85.15 crore.

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