Chock-full of incentives, subsidies and tax exemptions, the long-awaited Karnataka Semiconductor Policy was unveiled on Tuesday to the endorsement of the India Semiconductor Association (ISA).

Chief Minister B.S. Yeddyurappa, who unveiled the new policy at the ISA Vision Summit 2010, said he hoped it would draw hardware investment totalling $120 billion to the State by 2020. He added that the policy sought to encourage semiconductor units in tier 2 cities.

Fiscal incentives

The policy promises several fiscal incentives to the semiconductor industry, which include investment promotion subsidy, exemption from stamp duty, concessional registration charges and waiver of conversion fine for micro, small and medium enterprises, and large and mega projects. It envisages interest-free loan on value added tax to large and mega projects.

B.V. Naidu, ISA Chairman, said the new policy had adopted most of the recommendations that the association had made.

According to the policy, semiconductor start-ups engaged in design and embedded software, will get assistance from the Karnataka Information Technology Venture Fund (KITVEN). A Rs. 10-crore Karnataka Fund for Semiconductor Excellence will be set up exclusively for the sector to encourage innovation, research and development in chip design and product development. A characterisation laboratory will be set up in the Software Technology Park of India with the State government footing 50 per cent of the bill.

“Assembly-Test-Mark-Pack units will be encouraged with special investments in the 40 sq. km Information Technology Investment Region (ITIR) proposed near the international airport. The ITIR, which will be developed as an integrated township, will provide direct employment to 40 lakh people and bring in Rs. 1 lakh crore in the next decade,” claimed Minister for Information Technology Katta Subramanya Naidu.