Investment Potential
Right now, nowhere has more investment potential than India and that is especially true when it comes to semiconductor manufacturing. India’s long-awaited semiconductor manufacturing policy was announced on 22 February 2007 and is paving the way for India to make its mark on the global market.
Called the Special Incentive Package Scheme, the programme is focused on attracting capital for establishing semiconductor plants and industries for manufacturing other technologies and includes:
Incentives details
- The Government will bear 20 per cent of the capital expenditure during the first 10 years for fab units located inside Special Economic Zones (SEZs) and 25 per cent for those outside.
- Countervailing duty (CVD) on capital goods is also exempted for units outside SEZs.
- For semiconductor manufacturing, the minimum investment for availing of the incentives will be 2,500 crore (US$550 Mn).
- For other products like liquid crystal displays(LCDs), organic emitting diodes, plasma display panels, storage devices, photovoltaics and other advanced micro and nano technology products and assembly and testing the minimum investment for availing of the incentives will be Rs 1,000 crore (US$225 Mn).
- The Government’s participation will be restricted to 26 per cent of their equity portion. Further incentives may include local (State) tax breaks, concessions, and interest-free loans.
- Only facilities established before 31 March 2010 are eligible for these incentives.
Forecast for the semiconductor industry
A recent (February 2006) study by global growth consulting company Frost & Sullivan and the India Semiconductor Association (ISA), the representative body of the semiconductor industry in India, suggested:
- The domestic market for electronic goods will reach US$363 billion by 2015; this is expected to consume 11% of the global electronic equipment output. This is an increase from US$28.2 billion in 2005, at a compound annual growth rate (CAGR) of 29.8 per cent.
- Semiconductor content in the estimated electronic consumption in 2015 is expected to be US$36.3 billion accounting for 6.50% of the global semiconductor revenues.
- GDP contribution from this sector will grow to more than 12 per cent in 2015, from about 2 per cent in 2005, creating a much larger induced impact on the economy of the country.
- The semiconductor manufacturing industry would become one of the largest employers, creating 3.6 million direct jobs and an additional 5.6 million related jobs.
The incentives for investing in India’s semiconductor facilities go beyond economical solutions and into human solutions. No where else in the world will you find the combination of qualified, educated workers. While every investment has risk, India has more top-quality universities producing qualified graduates who are ready to work in semiconductor manufacturing facilities that are just waiting to be built: