Union Government okayed two plants to manufacture Semiconductor chips

February 19, 2014

In a bid to give boost to local production of electronics, the Union Government approved the setting up of two plants to manufacture semiconductor chips in India.
The two electronic chip manufacturing units will be set up by:

India’s Jaiprakash Associates, IBM and Tower Jazz at a cost of Rs 34,399 crore near the Yamuna Expressway in Uttar Pradesh.
France-based ST Microelectronics, HSMC Technologies (Hindustan Semiconductor Manufacturing Corporation) and Malaysia’s Silterra at Prantij, Gujarat at a cost of Rs 29,013 crore.

Benefits given by Government of India to electronic chip manufacturing units

Offered 25% subsidy on capital expenditure, tax breaks and Rs. 5124 crore to each plant as interest-free loans in a bid to attract chip makers.
The companies in the consortia will get all benefits listed under the National Policy on Electronics viz. Modified Special Incentive Package, which allows up to Rs 10,000 crore in benefits under the 12th Five Year Plan ending 2017.
They will benefit under section 35 AD of I-T Act and will also be allowed to deduct 100% expenditure made on research and development for development of electronic chips.

Note: Semiconductors are neither a good conductor of electricity (like copper) nor a good insulator (like rubber). These are usually very small and complex devices, and can be found in thousands of electronic devices viz. transistors, mobile phones, computers, hi-tech defense equipment, etc. The most common semiconductor materials are Silicon (Si) and Germanium(Ge).

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