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Date: 01-03-13

Budget 2013: India semiconductor fab dream addressed

To support Union Government plans to make India as an electronics and semiconductor manufacturing zone, Union Budget 2013 providing tax benefits to semiconductor manufacturing.

Finance Minister P. Chidambaram supporting the IC chip makers by waiving the custom duty for importing semiconductor equipment and machinery for chips fabs. He said in his speech "We recognize the pivotal role of semiconductor wafer fabs in the ecosystem of manufacture of electronics. I propose to provide appropriate incentives to semiconductor wafer fab manufacturing facilities, including zero customs duty for plant and machinery"

There is lot more to do to realize the dream of India having its own advanced semiconductor chip fab. These sops by Finanace Minister indicate, India semiconductor fab is going to be real.

India imports nearly 100% of its chips from other regions such as U.S., Japan, Taiwan, Singapore and Europe. India's electronics equipment manufacturing is also in weak state due to the lack of not only the fab but also other electronics components and materials. 65% of electronic equipments are imported and sops such as the one in the present budget is offered to reverse the trend.

There are 1000s of electronics companies who are into electronics manufacturing, but a few (less than 200) are into high end value added manufacturing. The advantage of electronics manufacturing is it creates millions of jobs for both for skilled work force as well as white collar jobs. The value pyramid of electronics lies on the base of local semiconductor and other key component manufacturing ability, which is fully missing in India.

Union Government is wooeing leading chip makers in the world to invest in India. Some of the companies showing interest includes TowerJazz Semiconductor from Israel and IBM. By end of this quarter, industry is expecting the announcement of fab investor by Government.

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