Plan panel moots 2 chip fab facilities

It envisages Rs 25,000 cr investment

“We have sent a proposal to the Cabinet for setting up two wafer fabs  for the electronic hardware segment, Minister for Planning Ashwini Kumar told reporters here.

“The Planning Commission has proposed an investment of Rs 25,000 crore for setting up of two wafer fabs with focus on development of semiconductor as well as electronics hardware industry,” he said. “To start with we propose an investment of Rs 7500 crore,” he added.

Pointing out that fast development of electronics hardware sector holds key to strengthen the prowess of manufacturing industry, Kumar said that currently there was a “big” mismatch between the demand and supply of electronic hardware goods.
At present as against domestic requirement of around US$50 billion worth of electronic hardware goods, country’s total production stands at US$25 billion.

As per an estimate, country’s requirements for electronic hardware goods will shot up to $400 billion in the next 20 years while the domestic production can go up to US$104 billion.

“That means if we do not step up our base for development of electronics hardware industry our import bill for these hardware products will overshoot oil import bill,” Kumar cautioned.

Several barriers

Electronics hardware sector is capital intensive and is facing several disabilities and barriers. The proposal of Planning Commission to set up wafer Parks will help Indian electronics hardware industry to develop localized content and value addition, Kumar said.

The Planning Commission has proposed that to woo private investment in electronic hardware industry the government should create policies for preferential access to domestically manufactured electronics hardware goods for all government procurements, he said. In response to a query on locations of the twp proposed wafer fabs, Kumar said locations had not yet been identified.

Recently the Cabinet had approved the proposal to set up an empowered committee for identifying technology and investors for setting up two semi-conductor wafer manufacturing facilities in the country. The Indian electronics hardware industry and the Indian economy would be the direct beneficiaries of the proposal, industry analysts said.

Catalytic impact

The semiconductor wafer fabs will have catalytic impact on development of downstream and upstream products, including ancillaries. It would have sizable impact on the development of Information Technology (IT) and ITES sector particularly in Very Large Scale Integration (VLSI) design software, solutions and services.It will also bootstrap innovation and R&D, especially in the area of semiconductors and others. It will help generating employment of the order of about three crore (direct and indirect) by 2020 across various levels of competencies, a paper prepared by the Plan Panel said.