Lok Sabha Question No. 1454 (UNSTARRED), answered on 2021-02-10
Subject: Manufacturing of Chip
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: Pushpendra Singh Chandel, Mala Rajya Laxmi Shah

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO. 1454

TO BE ANSWERED ON: 10.02.2021

## MANUFACTURING OF CHIP

## 1454.   SHRI KUNWAR PUSHPENDRA SINGH CHANDEL: SHRIMATI MALARAJYA LAXMI SHAH:

Will the Minister of ELECTRONICS AND INFORMATION TECHNOLOGY be pleased to state:

- (a) whether the Government has formulated any special incentive policy for the indigenous manufacturing of electronic chip, mobile chip and computer processor;
- (b)   if so, the details thereof; and
- (c)      the  details  of  investment  made  for  manufacturing  of  these  electronic  products  in  the country during the last three years; State/UT-wise?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION TECHNOLOGY (SHRI SANJAY DHOTRE)

(a)  and  (b):  Government  offered  special  incentives  for  setting  up  of  Semiconductor  Wafer Fabrication (FAB) Facilities in India. The main incentives offered are Annexed . Government had earlier approved two proposals for setting up of Semiconductor FAB facility in India one from the consortium led by M/s. HSMC Technologies India Pvt. Ltd. and the other from consortium led by M/s. Jaiprakash Associates Ltd. Letter of  Intent  (LoI) dated 19.03.2014 was issued to both the consortia. As per the LoI, both the consortia were required to submit certain documents for demonstration of commitment. The consortium led by M/s. Jaiprakash Associates  Ltd.  withdrew  their  proposal  on  02.03.2016  and  the  consortium  led  by  M/s. HSMC  Technologies  India  Pvt. Ltd. could not submit the requisite documents  for demonstration of commitment,  despite being provided extension of time on several occasions. Hence, the LoI issued to M/s.  HSMC Technologies India Pvt. Ltd. was cancelled on 20.04.2018. Therefore, both the proposals for setting up of semiconductor FAB facilities in the country could not materialize.

- (c):  Does not arise.

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## Annexure

Following  main  incentives  were  offered  in  2014  for  Setting  up  of  Semiconductor  Wafer Fabrication (FAB) Facility in India:

- a. 25%  subsidy  on  capital  expenditure  and  tax  reimbursement  as  admissible  under Modified  Special  Incentive  Package  Scheme  (M-SIPS)  Policy.  Disbursement  under MSIPS  to  be  made  pari  passu  on  a  quarterly  basis  as  against  the  annual  basis  as envisaged in the M-SIPS Policy.
- b. Investment linked deduction under Section 35AD of the IT Act.
- c. Viability Gap Funding in the form of Interest free loan to be capped at 20% of the capital expenditure (as admissible under M-SIPS)
- d. Exemption of Basic Customs Duty (BCD) for non-covered capital items
- e. Reimbursement  of  Countervailing  Duty  (CVD)  on  purchase  of  capital  goods  as admissible under M-SIPS Policy.
- f. Reimbursement of Excise duty paid on the products of the FAB for a period of 10 years.
- g. Deduction  on  expenditure  on  R&D  as  admissible  under  Section  35(2AB)  of  the Income Tax (IT) Act
- h. Reimbursement of expenditure to be incurred for the training of the project personnel as applicable under National Skills Development Corporation (NSDC) Scheme.

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