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

February 28, 2013

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?

Highlights

* 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 the 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 in Patiala.
* 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 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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  1. Shantanu Sharma
    February 28, 2013 at 9:21 am

    I think it would have been much better if the government had allocated some fund to set up an institute for research in the fields of embedded systems and hardware, so that in future, we would be capable to manufacture hardware products in India itself, instead of importing them! As the demand is increasing continuously for electronic gadgets in India, we have no other option rather then getting them IMPORTED!

    • February 28, 2013 at 9:53 am

      Quite correct! Also, the lack of any big domestic player in the Indian electronics/semiconductor industry is another problem! Best wishes

  2. Mrutyunjay
    March 1, 2013 at 10:51 am

    Some more to add to your treasure 🙂

    Import duty on STB increased to 10 percent – hope this combined with huge demand will improve local manufacturing.

    Tax on royalty paid for technology services increased to 25 percent. Companies can take two paths to avoid this tax – a) They can get more design work done in India; or b) Pull out of India!

    It will be interesting to see which path multinational design companies will take!!

    • March 1, 2013 at 10:55 am

      Surely, one wishes it does not become the second option! 😉

  3. Torri McClendon
    March 2, 2013 at 12:27 pm

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  4. Mrutyunjay
    March 7, 2013 at 5:17 am

    I was searching for some blogs on the story of cosmic circuits.. couldn’t see. Any reason why they they should sell themselves off to Cadence.. any thoughts? One more Indian semicon star fell off!!

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