An empowered committee constituted by the central government has invited foreign and Indian investors to set up semiconductor fabrication units to kick-start chip-manufacturing in the country. A preliminary ?expression of interest? requires investors to disclose in four weeks? time their profile, technology experience, salient features of the technology and product mix proposed, manufacturing capacity and quantum of the investment they would like to make.
The six-member committee formed in April and headed by Sam Pitroda has been mandated to assess and recommend the quantum of government support, in either physical or financial terms, potential investors would require. The committee, which has to oversee the building of at least two fabrication units, is likely to submit its recommendations to the government by July 31 this year.
The Indian semiconductor industry, mainly comprising VLSI design, embedded software development and hardware, totalled $7.5 billion in 2010 and is expected to grow to $10.6 billion by 2012. Nonetheless, the industry lobby body, the Indian Semiconductor Association, has pointed out that lack of a semiconductor manufacturing ecosystem means the Indian industry has insufficient experience in foundry interactions and a longer time to market.
Experts have also pointed to a strategic imperative for domestic chip-manufacturing ? India would run huge import bills in the future if it were to import all of its hardware needs. The electronics market in India is growing rapidly. The demand for electronics hardware, currently about $45 billion, is expected to jump to $400 billion by 2020. This would translate into nearly $50 billion in semiconductor demand, the government estimates.
Chip-manufacturing, however, is an expensive affair and can require capex investments of up to $3 billion to set up a unit with latest technologies. The industry has long been pressing the government for support, in terms of equity and subsidy.
While a tender floated by the government does not mention what support it would offer, it says that there would be a favourable policy framework.