Cabinet nod for incentives to set up semi conductor units

New Delhi, Feb 22 (UNI) The Cabinet today approved a special incentive scheme to attract investors for setting up semi- conductor fabrication units in the country.

Incentives include a direct subsidy of 25 per cent of the capital expenditure incurred during the first 10 years of the project.

The Department of IT has proposed that any unit claiming incentives under the package can do so in a combination of equity not exceeding 26 per cent, investment grants and interest subsidy.

The proposed policy for semi conductors pegs the threshold investment (for availing the benefits) at Rs 2,500 crore for semi conductor fabrication projects. For manufacture of high tech products other than semi conductors, the threshold level for investment is Rs 1,000 crore.

The package comes after the Finance Minister in his Budget speech last year promised support for the semiconductor industry.

He said that the time was ripe to make India a preferred destination for the manufacture of semiconductors and other high technology IT products like flat LCD/OLED/Plasma Panel Displays and storage devices.

A Frost and Sullivan study has said India is the fastest growing market for electronic products in the world with consumption expected to grow to 363 billion dollars by 2015 from 28 billion dollars in 2005.

India will account for 11 per cent of the global electronics market by 2015, compared to 1.8 per cent in 2005.

India will also consume 36 billion dollars of semiconductors in 2015, amounting to 6 per cent of the global market.

UNI