The Government’s efforts to woo chip makers to set up semiconductor fabrication units in India may be too little too late.
Though the Finance Minister, in the Budget 2013-14 had announced nil customs duty on plants and machineries for semiconductor manufacturers, companies like Freescale Semiconductor are not biting it.
“We are already the largest design centre outside of the Freescale US and have fab in location across the globe and we are not looking India as destination for setting up the fab,” Guruswamy Ganesh, Vice-President and Country Manager, Freescale Semiconductor India, told
He said India is already late as a country for setting up the fab, but nevertheless it is a good direction to take, as this entire project will need high scale commitment and participation from the Government.
Setting up a fab costs nearly $5 billion which chip makers say can happen only if the market is huge.
“First the market itself has to be big to justify the investments then the Government has to put in a significant amount of investments. Most chip makers already have established manufacturing facilities globally so why should anyone look at India now,” said one of the top chip makers.
Apart from Freescale Semiconductor, there are companies such as Intel, Qualcomm, AMD and Texas Instruments, which are big names in design and manufacturing of semiconductors and have huge presence in India.
According to the Department of Electronics and Information Technology (DeitY), the demand for electronics hardware in the country is projected to increase from $45 billion in 2009 to $400 billion by 2020, and products like semiconductors are basic requirements for them.
Setting up of such fabs would be a boost to industry as the demand for electronic hardware grows and also create more jobs. The Government is expected to create jobs for around 28 million people by 2020 for the whole electronic and IT industry through such manufacturing facilities.
“The zero tax incentive is a boost for semiconductor fab but it does not really affect us since we are not the players running for the fab,” Ganesh said. Freescale started its operations in India in 1998 that sells products such as micro controllers, processors, sensors, software and tools.
Its customers include automotive segment for body and engine control systems; industrial segment in UPS, inverter, energy meters and motor control; telecom in both wired and wireless for base station and client applications; and consumer segment for appliances control and remote control.
The US based company’s subsidiary in India has three offices in Noida, Bangalore and Hyderabad.
When contacted the other companies declined to comment on the Budget proposal. But some of them privately admitted that India is a long way off from being considered for investments.
ronendrasingh.s@thehindu.co.in