A Special Incentive Package Scheme (SIPS) to promote investments into semiconductor and ancillary industries is likely to be extended for a few more years, a top official with the department of IT said. The scheme, part of the government?s Semiconductor Policy announced in September 2007, expired on March 31.
In response to the scheme, the government had received as many as 15 investment proposals amounting to Rs 1,30,899 crore as of December 2009. The scheme offered a subsidy of 20% of the overall capital expenditure if a unit was set up in an SEZ and 25% if in a non-SEZ location.
Although the 2007 Semiconductor Policy came after investors had expressed interest in chip fabrication, most of the proposals received were in the solar photovoltaic segment?a trend likely to continue because of the world?s search for renewable energy sources. The solar segment is clubbed under the ambit of semiconductors because many of the processes and materials used in the fabrication of photovoltaic cells are similar to those used in chip manufacturing.
With the domestic solar generating capacity now a big government focus, extending the incentive may have become an easier task for DIT. The National Solar Mission was launched in January this year; it targets 20,000 mw of solar generating capacity by the end of the 13th Five Year Plan from an installed capacity of just about 100 mw currently.
?SIPS may be extended in the next 3 to 6 months. The government is currently evaluating the recommendations tabled by an expert committee formed by the Scientific Advisory Committee to the Cabinet,? the DIT official said.
The recommendations are now with the ministries of commerce, finance, revenue and MNRE for their comments and for studying the financial impact to the exchequer on account of the subsidies. ?Many firms would have difficulty in securing funding because of the slump. Besides, the photovoltaic industry should be given time before it can mature,? chairman of the committee and professor at IIT Mumbai Juzer Vasi told FE. Member of the expert panel and president of semiconductor equipment maker Applied Materials India, Madhusudan Atre, said the deadline extension would give companies a longer window to re-look at the economy and their plans to get into manufacturing in India.