To attract fab companies Government plans policy overhaul

To attract fab companies Government plans policy overhaul


NEW DELHI: The policy framework of the ministry of electronics and information technology (MeitY) is being revised towards making India a global semiconductor hub; this revised policy will see the government taking a more active role, including initial investment, in a bid to attract private sector players. As little commercial viability was offered for the private sector the existing policy has not worked.

For setting up of a semiconductor wafer fabrication manufacturing facility a Jaypee-led consortium was earlier pulled out midway from a project.

Recently, another consortium, led by Hindustan Semiconductor Manufacturing Corporation (HSMC) including ST Microelectronics and Silterra Malaysia, which had also received approval to set up a fab unit, has been facing challenges in tying up the funding. The two projects were worth Rs 51,000 crore.

Admitting that the approach made by the government of inviting two private parties for the project—in which it was ready to subsidise as much as 40% of the project cost—had not worked, the new approach will be more broad and will have the government taking “a strategic and central role” Meity Secretary Aruna Sundarajan told ET.

Sundararajan said ,”Instead of just inviting the private sector, we are looking very closely at an approach where government makes a strategic investment (complete initial funding), and then at a suitable point in time, dilute equity to bring in private sector partners.”

The government may also “look at overseas acquisition of assets” while allowing alterations to make the policy more compelling to investors, she added, without specifying.

The core to Prime Minister Narendra Modi’s ambitious Make in India programme is Chip-level manufacturing that may attract big-ticket investment with the entire ecosystem including design and research & development, and potential job opportunities.

By 2020 India’s semiconductor demand would bring economic opportunity worth $50 billion across segments that include $30.3 billion from telecom products and equipment alone the Research firm Frost & Sullivan has estimated. A major cost of mobile phones and other electronic devices has been accounted by the electronic chipset.

Additional secretary Ajay Kumar said, for multinational firms to set up units in India there has been little commercial viability, although it is important to the country’s perspective to create a semiconductor wafer fabrication (Fab) ecosystem.

He added that the department is closely working with the sole consortium led by HSMC, which is still trying hard. All the requisite clearances have been given by the government to the HSMC-led consortium and its resources is now being mobilized and getting investors. More time to submit documents was given to the consortium for setting up the facility in 2016.

The government is looking at building the local capabilities in some areas like gallium nitrate-based fabs since it believes that having its own ecosystem is important enough.  The government is also considering promotion of promising approaches that have come from Indian Institute of Science, along with consortia.

To set up fab projects in January 2015, the government reconstituted an empowered committee (EC) under the chairmanship of NITI Aayog member VK Saraswat . The EC is working towards stimulating the fab segment, which is capital intensive with niche technology expertise, available with only a limited number of players worldwide.

“An incubator has been set up with financial support from the MeitY at IIT Hyderabad to promote fabless chip design industry in the country,” Kumar said.

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