The Hindu Business Line : `Viability gap funding' for semiconductor projects

Provides incentives required for the industry to establish its roots and make domestic manufacturing of semiconductors and electronics a viable opportunity.

New Delhi , Feb 28

In a move that could transform India into a semiconductor-manufacturing hub, the Union Budget today proposed to use vehicles of "viability gap funding" and India Infrastructure Finance Company for providing equity participation in new projects pertaining to manufacturing of semiconductors and high-end technology IT products.

"With the spread of IT and IT enabled services, India (can now become) a preferred destination for manufacture of semiconductors and other high end technology IT products including Wafer, Assemble, Test, and manufacture of semiconductors; Flat LCD/OLED/Plasma Panel Displays and storage devices.

To achieve this, the Ministry of IT will announce a policy shortly," the Finance Minister, Mr P. Chidambaram, said announcing the General Budget 2006-07 in the Lok Sabha today.

The window to provide equity participation or viability gap funding to ventures would be open for three years to accelerate investment in semiconductor manufacturing.

The move is expected to come as a boost to SemIndia's plans for its $3-billion semiconductor-manufacturing base, for which it has entered into a memorandum of understanding (MoU) with the Andhra Pradesh Government.

"The Budget offers the right incentives required for this industry to establish its roots and make domestic manufacturing of semiconductors and electronics a viable opportunity. ," Dr Vinod Agarwal, Chairman of SemIndia Inc, said.

Mr Rajendra Khare, Chairman of India Semiconductor Association (ISA), said, "The viability gap funding mechanism could act as a spark to fuel the plans of those companies that were in a `wait and watch' mode."