India is expected to emerge as an export hub for semiconductors by 2015 primarily due to the government policies, supporting hardware production, qualified talent pool and low freight costs. Also, the demand for real estate space from the semiconductor industry is expected to cross over 600 million sq ft by 2015 and in the short term of around 333 million sq ft by 2010, says a latest report by Jones Lang LaSalle Meghraj (JLLM).
The semiconductor sector in the country is closely linked to many technology-intensive industries such as automobiles, consumer electronics, defence, communications, computers and other manufacturing industries. The semiconductor industry recorded revenue worth $3.5 billion in 2007. It employs about 1,02,000 and is expected to touch $5.5 billion in revenue by 2009, the report pointed out.
Quoting Indian Semiconductor Assocaition (ISA), JLLM said the industry is expected to generate 1.85 million jobs by 2010 and 3.58 million jobs by 2015. Accordingly, the average space required per employee in a fab manufacturing facility is in the range of 150-180 sq ft as against 80-100 sq ft per employee of the IT industry. Based on this, the demand for industrial as well as office real estate space will be in the range between 277.5 million sq ft and 333 sq ft by 2010 and will be in the range of 537-644.4 million sq ft by 2015.
According to JLLM, one of the major drivers for growth will be the special incentive package scheme announced by the Centre way back in 2007 to encourage huge investment in this sector. Under this scheme, the Centre will be able to provide an incentive of 20% on capital expenditure during the first 10 years for units in SEZs and 25% for non-SEZ units.
The policy proposes a minimum investment of $625 million for semiconductor manufacturing plants and a minimum investment of $250 million for ancillary plants. The move is expected to attract $6 billion to $9 billion in investments over the next three to four years. As of April 2008, the proposed investments in this industry is estimated to be around Rs 65,000 crore. Some of the major players which has made huge investment proposals include Reliance Industries (Rs 42,000 crore), followed by Videocon (Rs 8,000 crore), Moser Baer (Rs 6,000 crore) and Signet Solar (Rs 9,700 crore).
In addition to that a huge fab city is being developed at Ranga Reddy district in Andhra Pradesh with major participation from private corporates such as AMD, SemIndia, Base Oxygen Corporation, Flextronics, HSMC, etc. The AP government has allotted over 1,050 acre of land for the same, the report said.