With its earlier policies failing to attract electronic chip makers to invest in India, the government is now looking to rework policy to incentivise technology firms and investors to set up semiconductor wafer manufacturing units in the country.
In February 2014, the Union Cabinet had approved two proposals for setting up of semiconductor wafer fabrication units, or fabs, in the country.
While the Jaiprakash Associates-led consortium, including IBM and Israel’s Tower Semiconductor, had pulled out in March last year, things were not moving ahead for the consortium led by HSMC Technologies, according to sources. The two projects are worth more than ₹63,000 crore.
“[The] Empowered Committee has decided to meet major electronics industry associations and apex chambers to seek their views on the way forward to set up semiconductor fabs in the country,” an IT Ministry official told The Hindu .
The Union Cabinet had authorised the Empowered Committee to take all the decisions to implement fab projects.
The official added the HSMC consortium was finding it difficult to raise funds for the facility and has hence approached the government to schedule “an investors’ meet wherein Ministry officers can participate and respond to the queries of the investors”.
‘Salvaging HSMC project’
However, the official added that the HSMC project was more or less ‘scrapped’. “However, we are still trying to see if anything can be done to put the project back or track. We might hold a meeting with investors this month.” The Minister for Electronics and IT, Ravi Shankar Prasad, has instructed the IT Secretary Ajay Prakash Sawhney to work on a war footing on getting a semiconductor fab in India, it is learnt.
HSMC has not yet submitted the documents required for Demonstration of Commitment.
While the last date for submission of these documents was April 28, 2014, “several extensions were provided to both consortia as per their requests.”
Semiconductors form about 30% of the cost of all electronic products, including mobiles.
“The setting up of a Semiconductor Wafer Fabrication unit is a critical pillar required to promote Electronics System Design and Manufacturing (ESDM) in India,” the official pointed out, adding that these will also help check the import of electronic products.
As per industry estimates, the Indian ESDM market is expected to grow from $31.6 billion in 2015 to $400 billion by 2020 and consumption of semiconductors is expected to increase to approximately $55 billion in 2020.
The Jaiprakash Associates-led consortium with U.S.-headquartered IBM and Israel-based Tower Semiconductor as partners with a project cost of ₹34,399 crore was to be built at Yamuna Expressway in Uttar Pradesh. The other, led by HSMC Technologies with ST Microelectronics and Silterra Malaysia Sdn Bhd as partners and project cost of ₹29,013 crore was to come up at Prantij, Gujarat. The proposed FABs were expected to create direct employment for about 22,000 people and indirect employment for about one lakh people
According to a Niti Aayog report, contribution of electronic industry to GDP in India is only 1.7% as compared to 15.5% in Taiwan, 15.1% in South Korea and 12.7% in China.
In India, most of the OEM (Original Equipment Manufacturing) is confined to last mile assembly indicating that the industry remains in the early stages of development.
