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August 26, 1997


DoE plugs for sharper focus on chip manufacture

The Department of Electronics plans to promote the manufacture of semiconductor devices by creating tailor-made infrastructure in proposed hi-tech industrial parks.

A working group is to be constituted soon to study examples of such hi-tech industrial clusters in developed countries and prepare a feasibility report for setting up of similar facilities in India.

The group will also devise a package of incentives to encourage investment in hardware manufacturing from both domestic and foreign companies.

Semiconductor manufacture is expected to be the nucleus around which these industrial parks are planned. This would automatically lead to a growth in the electronic component sector, according to official sources.

The working group will study similar ventures in China and Southeast Asian countries such as the Philippines.

The incentives, which are likely to be offered, include tax benefits, pioneering industry status and government participation. Sources pointed out that since creating global scale units in India would need investments of nearly $1 billion, incentives are a must.

One concrete proposal doing the rounds is the possible joint ventures between the Indian Telephone Industries, Bangalore, and the Semiconductor Complex Limited, near Mohali on the outskirts of Chandigarh, with private sector companies to set up world-scale plants.

Import and export goods moving in and out of the proposed hi-tech parks will be given high priority in customs clearances. Infrastructure - such as good access roads - will be comparable with similar parks abroad, the sources said.

The scheme is to be differentiated from the existing Electronic Hardware Technology Park scheme since the focus will be on hi-tech manufacture.

Officials acknowledged that the EHTP scheme largely attracts low-tech manufacture only. The recent budget tried to make hardware manufacture more attractive by introducing differential duty structure for finished parts and components. Import duty on finished goods now stands at 20 per cent while duty on key parts, disk drives and integrated circuits stands at 10 per cent.

Duty on semiconductors is higher at 20 per cent. The modified EHTP scheme or the Unified Manufacturing Programme, as it is popularly known, is also expected to foster domestic industry which could in turn encourage the setting up of global scale plants in the country.

The Manufacturers Association of Information Technology puts the size of the nation's hardware industry at $2.03 billion. Hardware exports stand at $415 million compared to software exports which exceeded $1 billion last year. The hardware industry has set itself the export target of $1.7 billion by 2001 when the total size of the industry is expected to be $13 billion.

- Compiled from the Indian media

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