Kerala is virtually out of the race to bag the country’s first semiconductor wafer fabrication unit project, apparently because of lack of enthusiasm and support from official and political circles. Not long ago, Kochi was in the running to clinch the project.

The city was in contention after Petronet LNG Limited put out its plan to set up a 1500 MW power plant at the site adjacent to the LNG terminal at Puthuvype. As availability of distilled water is one of the prime requirements for a semiconductor fab unit, the close proximity to a power plant was considered an advantage.

The plant could provide large quantities of ultra pure water, based on ‘cold energy utilisation process’, with natural gas fuel.

India is yet to have a semiconductor fab and an Empowered Committee of the Union government, including Sam Pitroda, is understood to be studying proposals received from various States. A top official of the Kerala State government in the IT department told The Hindu that State was not in the reckoning for the project.

The State is slipping out of the race even as Petronet LNG Limited is going ahead with the power project. The project was envisaged as a joint venture with the State government, said A.K. Balyan, Managing Director of PLL. The State government was expected to take steps to carry out the project, he said.

The Union government had announced a national policy for electronics and invited global expression of interest for the fab unit two years ago. Over 30 companies had evinced interest out of which 16 were shortlisted. Two consortiums were in final consideration and could be entrusted with the setting up of semiconductor fab units in two cities in the country, sources in the industry said.

Semiconductor fab units required large tracts of land, said a top official of Kerala State Industrial Development Corporation, alluding to the lack of excess land in the State. Several States had set their sights on the project as clinching it could change their future. The economies of scale would be enormous, ushering in large-scale employment, comparable to the Silicon valley in USA.

India Electronics and Semiconductor Association president PVG Menon denied that the requirement of large areas of land was the primary requirement for setting up a fab unit. Availability of power and distilled water, apart from accessibility to an international airport and a favourable environment were decisive factors for companies to set up the fab units , he said.

Fabs have been set up in countries such as China, Taiwan and Singapore, he said. Union Finance Minister P. Chidambaram had announced a customs duty waiver to import equipment for semiconductor fab units. The association welcomed such projects as the country as a whole would stand to benefit, he said.

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