Fabcity Comes Alive! Cabinet gives In-Principle Approval on 11.01.07

Semi Conductor Policy - Approved. Fiscal and Tax Concessions to be Firmed-UP within Next Few Days

The Semi Conductor Policy outlying incentives and concessions to the fledgling Fab industry in India was discussed by the Cabinet and approved on 11.01.07. Incidentally, CM had also reached Delhi to press for the Policy Clearance. After having signed MOU with Semindia in 2006 Feb, Dr. Raj Shekhar Reddy had been under pressure, to get the policy released.

At the Cabinet meeting, the Policy which covers the entire gamut of development, manufacturing and sales of semi conductors was cleared. Considering the urgency of the matter, the Cabinet has set up a special GOM (Group of Ministers) to review and finalize the incentives and taxation matters. This is required to be completed within next few days and the concessions are likely to be part of the Union Budget, as informed by us, earlier.

The lack of Semi Conductor policy with clarity on tax and incentive regime, has hampered financial and physical progress of Fabcity Project. The equity and debt funding by Foreign Entities, Indian and International Financial Institutions were affected.

Though Semindia had argued for concessions to the tune of 40%, the fiscal incentives including equity participation is likely to be capped at 25%.

The clearance of the Semi Conductor Policy had become top priority issue for the Govt. due to the rapidly expanding electronic industry, in the form of Mobile Phones, MP3 Players, and a host of other devices. While India is the fastest growing market for these devices, the country is either forced to import finished goods or components like chips, for manufacturing.

According to a recent study by Frost and Sullivan, India is the fastest growing market for electronic products in the world, with consumption expected to grow to $363 billion by 2015, from $28 billion in 2005.

The projected employment generation by 2016, is a staggering 40 Lakh jobs, by the industry. No Govt. could have overlooked the semi conductor industry !