The Hindu Business Line : `Fab policy a timely initiative'

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Bangalore Feb. 23 Though slightly disappointed that the first chip fabrication policy did not meet the industry expectation entirely, the India Semiconductor Association, has described it as a `historic initiative' for it reflected the government's strong backing through its residual equity participation. Like its investment in Maruti Udyog, which spurred the auto sector value chain growth, this policy measure over a period should nurse semiconductor manufacturing.

"It is a big commitment that should instil investment confidence for growing the chip- making industry," said Mr Rajendra Kumar Khare, Chairman, ISA.

Though ISA was yet to read the fine print of the policy, it was happy that a timely initiative had been taken to give a boost to make India a chip-making hub.

ISA had expected a 25 per cent investment incentive against 20 per cent announced by the Government. However, with the incentive going up to 25 per cent with SEZ status, this should be a good threshold level for serious investors, Mr Khare said.

Countries such as Israel offered, apart from a 24 per cent investment incentive, additional sops of eight per cent for infrastructure and a seven-year tax holiday.

Mr Khare said India with its low-cost advantage could emerge as a competitor in `triple play' entity with the manufacturing of the chip being added to its strengths in chip-designing and software.

He said to this could be added the potential of FDI coming to allied areas of capital equipment and other inputs related to chip making.