The government is out to boost the making of microchips in India by encouraging high-technology electronic manufacturing in the country.
Finance minister P Chidambaram said in his budget speech that there would be no customs duty on equipment required to set up a semiconductor "fab" (fabrication unit) in the country.
"The electronics policy 2012 is intended to promote manufacture of electronic goods ... We recognise the pivotal role of semiconductor wafer fabs in the ecosystem of manufacture of electronics. I propose to provide appropriate incentives to semiconductor wafer manufacturing facilities including zero customs duty for plant and machinery," Chidambaram said.
Chip manufacturing is expected to get further fillip from an investment allowance of 15% that a company willing to invest Rs. 100 crore or more in plant and machinery across sectors will enjoy in two fiscal years from April this year. In simple terms, spending on machinery will be encouraged through the tax break.
The Indian Electronics and Semiconductor Association welcomed the incentives and said that the move would aid in attracting investments into the sector.