Indian government has received proposals worth Rs 65,000 crore to invest in the fields of semiconductor and electronics manufacturing, reports Economic Times. These proposals are part of a drive by the Indian government to encourage manufacturing of electronics equipments in India and reduce reliance on imports for the same. The government had approved National Electronics Policy in 2012, to create a turnover of $400 billion and two million jobs by 2020.

M-SIPS investment falls short of target?

The department of electronics and information technology (DeitY) Secretary J Satyanarayana said that out of these proposals, Rs 13,800 Crore was under the Modified Special Incentive Package (M-SIPS). It is worth noting that in January 2013, while setting up the agenda for DeitY for the year, Union Minister of Communications & IT Kapil Sibal had set up a target of Rs 25,000 crore for investments under M-SIPS. The current level of investments falls far short of this goal. It also needs to be pointed out that the proposals for setting up two fabs has not been calculated under M-SIPS (more on that later).

DeitY had invited applications under M-SIPS in January 2013 and offered 25% subsidy to companies in non-SEZ and 20 % within SEZ, reimbursement of CVD/excise for capital equipment for non-SEZ units and reimbursement of central taxes and duties for 10 years in select high- tech units like fabs. The last date for M-SIPS application is July 26, 2015, so there is hope that the government will be able to attract more investments under this package this year.

Progress on EMCs

Union Minister of Communications & IT Kapil Sibal had given the government organisation time till December 2013 to set up 10 Electronic Manufacturing Clusters (EMCs) where these companies can set up base and Satyanarayana says that the government has set up a corpus sum of Rs 30,000 crores to set up these EMCs. It looks like 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, out of the 30, Bangalore one has got the nod and the first brownfield EMC will be set up in Electronic City at a cost of Rs 85.15 crore.

Progress on fab

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 has 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.

As far as fabs are concerned, the government had announced in September 2013, that two units will be set up in Noida and Gandhinagar, Gujarat at a cost of Rs 26,300 crore and Rs 25,250 crore respectively. These units will manufacture 90, 65 and 45 nm nodes in Phase I, 28 nm node in Phase II with the option of establishing a 22 nm node in Phase III. These fabs will also receive incentives over and above what is already provided under M-SIPS which is probably why this investment was not mentioned under that category.