India's communication and IT minister Dayanidhi Maran has been lobbying for quite sometime. Finally, just before the Union Budget, he seems to have convinced fellow Tamilian and finance minister P Chidambaram on the need to provide incentives for setting up semiconductor fabs in the country. So for a Rs 2,500 crore ($ 555 million) investment in a fabrication facility, the investor will get a 25% capital subsidy for the first 10 years. In case the fab is located in a special economic zone (SEZ), it works out to 20%.
The subsidy also applies to investments of Rs 1,000 crore in manufacturing liquid crystal displays (LCD), organic light emitting diodes (OLED), plasma display panels (PDP), storage devices, photovoltaics, nano technology products.
So does this mean that there will be a rush to set up units? That will depend on how the incentives here compare to that in other parts of the world. It ranges for 30% to 90%. It would still be sometime before an Intel actually comes here. After all, they can still cater to the Indian market from locations abroad.
But then these incentives are over and above what the various state governments offer them. It is estimated that these incentives should bring in investment worth $ 10 billion over the next three years.
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