A proposal by global venture capital firm Walden International to set up a fund to start semiconductor fabrication units in India has hit a roadblock, with the Planning Commission yet to approve the project.
The US-based firm had sent a proposal a year ago seeking participation from the Government.
A government source told
Walden International, a San Francisco based firm, focuses its investments on four industry sectors globally: communications, electronics, software and IT services, and semiconductors. It has a committed capital base of over $1.6 billion.
If the proposal to the government had been approved, Walden was expected to invest $5-10 million in the country by funding electronics chip design start-ups.
The Government was to invest around 15 per cent of the project, under the proposal.
A high-level committee set up to review the proposal had even recommended Government participation.
Innovation imperativeA Government note accessed by Business Line said the committee was of the view that the need for adequate finance for seed-stage and early stage-funding was desirable to promote innovation and develop intellectual property rights in the country. In particular, in the Electronic System Design and Manufacturing (ESDM) field.
The high-level committee was formed in 2012 under the chairmanship of R Chidambaram (Principal Scientific Advisor to Government). Other members of the Group included Ajay Shankar (Member Secretary, National Manufacturing Competitiveness Council), PVG Menon (President, Indian Electronics and Semiconductor Association) and Saurabh Srivastava, Founder Chairman of Nasscom). “The committee was set up because none of the venture capitalists in India is involved in such funding. We thought Walden was a good idea since they proposed to join the Government and we had recommended it to the Government because they (Walden) have expertise in such funding,” said Srivastava.
He said companies such as Walden showing interest would also lead other venture capitalists from around the world to invest in the country.
The high-level committee was also supported by Department of Electronics and Information Technology (DeitY) officials led by Ajay Kumar, Joint Secretary.
May take a backseatBut, without ‘in-principle’ approval from the Planning Commission, the idea of involving foreign investors may take a backseat.
The delay in approval may also lead to few foreign firms investing in fab units in India, say industry veterans.
“We don’t have venture capitalists in India but vulture capitalists. There are venture capitalists only for software and services like social, mobility, analytics and cloud, but not for such projects (semiconductor fabs),” said PVG Menon of IESA, adding that India is already behind many other countries in making semiconductors because of this.