In a move to boost manufacturing of high tech electronic products in India, government today announced zero customs duty for equipments required for setting up semiconductor (electronic chips) plant in the country would be free from customs duty.
“The electronics policy 2012 is intended to promote manufacture of electronic goods in India. We recognise the pivotal role of semiconductor wafer fabs in the ecosystem of manufacture of electronics.
“I propose to provide appropriate incentives to semiconductor wafer manufacturing facility including zero custom duty for plant and machinery,” Finance Minister P. Chidambaram said while presenting the Budget for 2013-14 in Parliament.
He also said a company investing Rs 100 crore or more in plant and machinery across sectors during the period 1-4-2013 to 31-3-2015 will be entitled to deduct an investment allowance of 15 per cent of the investment.
The Ministry of Communications and IT last month had said that it is looking to attract investment of Rs 25,000 crore in the electronics sector from around 100 units to be set—up in 10 manufacturing clusters this year.
The Finance Minister said the investment allowance will be in addition to current rate of depreciation and “there will enormous spill over benefit to small and medium enterprises.”
Keywords: Union Budget 2014, P. Chidambaram, electronics policy 2012, semiconductor manufacturing, budget allocation, tax sops, tax incentives, custom duty
It seems that the Ministry and its Advisors have not done a thorough analyses of the Semiconductor industry since the subsidies ( waiver of customs duties ) offered appear so inadequate compared to the risks involved. For at least the last 8 years various Ministries of the Govt. of India have publicized their desire to promote semiconductor manufacturing in India but nothing has materialized. A Bangalore based group that rather vainly calls itself " Indian Semiconductor Association " at most knows some circuit design but has no first hand experience in semiconductors !! Under the circumstances it would be best for the Govt. of India to invite real experts including NRIs to an open meeting and formulate a gameplan based on their input.
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