Thursday, February 28, 2013

Union budget 2013-14: Is there some hope for semiconductors?

Here are highlights of the Union budget 2013-14 presented by P. Chidambaram, union Finance minister, Government of India. Also, is there finally, some hope for the Indian semiconductor industry?


* Doing business with India should be easy, friendly and helpful.
* Foreign investments must be encouraged.
* Accelerating growth is the main goal.
* Need to encourage FDI in consonance with economic priorities.
* To target $1 trillion in infrastructure in the 12th plan.
* There are incentives for semiconductor wafer fab manufacturing.
* There will be appropriate incentives for semiconductors industry, including zero customs duty on plants and machineries.

* To increase allocation for science and atomic departments.
* Indian Institute of BioTechnology to be set up at Ranchi.
* Non-conventional wind energy sector needs help.
* Will encourage cities to take up waste-energy projects through PPPs.
* Plan being developed for Chennai-Bangalore industrial corridor.
* Preparatory work started for Bengalooru-Mumbai Industrial Corridor.
* To launch two new industrial cities in Gujarat and Maharashtra.
* Propose to continue with the Technology Upgradation funds scheme for the textile sector.
* India's first women's Public sector bank to be set up.
* Woman’s bank license to be in place by October, 2013.
* All PSU banks branches to have ATMs by March, 2014.
* Zero customs duty for electrical plants and machinery proposed.
* Higher customs duty on set top boxes.
* To provide more than Rs 4200 crore for medical studies.
* To allocate Rs 1106 crore for alternative medicine industry.
* To allocate 100 crores to AMU, BHU, TISS-Guwahati and INTACH.
* Government to set up National Institute of Sports Coaches.
* To expand private FM radio to 294 cities.
* To auction 839 licenses for FM network to cover all India.
* Government to construct power transmission system from Srinagar to Leh at the cost of Rs 1,840 crore, Rs 226 crore provided in current budget.
* Mobile phones priced more than Rs. 2,000, will see duty raised by 6 percent.
* Extend tax benefit to electrical vehicles.
* A company investing Rs 100 crore or more in plant and machinery in April 1, 2013 to March 31, 2015 will be allowed 15 percent investment deduction allowance apart from depreciation.
* SEBI to simplify KYC norms governing foreign investors.
* SEBI will simplify procedures for entry of foreign portfolio investors to invest in India.
* Higher outlay on waste management.
* Government to monitor cost of doing business in India.
* Zero customs duty proposed for electrical plants and machinery.
* Proposal for an investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs.100 crore in plant and machinery during the period 1.4.2013-31.3.2015.
* Proposal to provide Rs. 800 crore for the Ministry of New & Renewable Energy for generation-based incentive for wind energy projects as the non-conventional wind energy sector deserves incentives.
* Government will provide low interest bearing funds from the National Clean Energy Fund (NCEF) to IREDA to on-lend to viable renewable energy projects. The scheme will have a life span of five years.
* Proposal to set apart Rs. 2,000 crore and asked the National Innovation Council to formulate a scheme for the management and application of the fund.

Coming to semiconductors, the world today is discussing the viability of 450mm fabs. I am well aware that Malcolm Penn has been pushing for 450mm fabs across Europe. I believe that one such fab will cost in the excess of $25 billion, if not more. So, who will invest that kind of money in India? Do we have clean water and 24-hour electricity supply in any state that’s required for such a fab? What will this so-called 450mm fab manufacture? Does the fab have a blueprint in place? Well, have we even addressed any of these questions?

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