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Budget may offer production incentives for fabless chip cos
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SME Times News Bureau | 22 Jan, 2020
The Union Budget 2020 may unveil a scheme on production linked benefits
to attract hi-tech manufacturing in semiconductors, and microprocessors
to India, apart from giving tax incentives to solar electric charging
infrastructure, computers, and servers for its thrust in manufacturing
of global products to reduce imports.
To make it look more
attractive to MNCs to opt for domestic electronics manufacturing in
India, the Budget may dish out production-linked subsidies for companies
involved in semiconductor fabrication. This is aimed at inviting global
semiconductor, and microprocessor companies to set up plants in India.
Earlier also, the government had announced schemes for setting up semiconductor plants in the country.
The
National Policy for Electronics, 2019, argues for special support for
developing core competencies in the strategic sub-sectors like fabless
chip design industry.
The government could provide tax incentives
to high-tech manufacturing plants in the fields of solar photovoltaic
cells, lithium storage batteries, solar electric charging
infrastructure, computers, servers, and laptops.
For 'Make in
India', there may be investment-linked income tax exemptions under
Section 35AD of the Income Tax Act and other indirect tax benefits.
Many
global semiconductor companies such as ARM, Qualcomm, Intel, Cadence
and Texas Instruments have set up design and software development
infrastructure here but per se, chip manufacturing plants are still
elusive for India.
Intel, AMD and ARM for microprocessors, and
Qualcomm, Samsung and MediaTek are the names in this segment globally
who also cater to the telecom segment and their chips are imported by
Indian companies.
The Indian requirement for chips are
completely met through imports. The Indian semiconductor component
market is expected to be worth $32.35 billion by 2025, growing at a
compunded annual growth rate of 10.1 per cent between 2018 and 2025,
according to the Indian Electronics and Semiconductor Association
(IESA), an industry body.
China, on the contrary, is building a
homegrown chip programme, eyeing adoption of local semiconductors in 70
per cent of its products by 2025, up from 16 per cent currently.
In
last few years, the Indian government has launched a slew of schemes to
boost local manufacturing of electronic goods. Total production of
electronic goods in value terms more than doubled from $31.2 billion in
FY15 to $65.5 billion in FY19, led by mobile phones, shows data from the
Reserve Bank of India's report.
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