IBM will produce chips
The growing electronic economy in India has captured the attention of giants like IBM and St-microelectronics. Reports have confirmed that the two global players are in talks with the central government to invest in chip manufacturing units in India. Both the companies will start with an initial investment of approximately 25,000 crores.
St-microelectronics did not respond to a questionnaire sent on Monday, while an IBM spokesperson said the company it “doesn’t comment on rumour or speculations”.
The electronic hardware economy as per the government reports surpass more than 45$ billion as of now. The figures are expected to go beyond 400$ billion by 2020 if the current growth trend continues. A few government have also expressed their interest in attracting more investor consortium to set up their own fabrication units.
The talks have been now in advanced stages. However, the exact locations of the units is still not decided. But top government sources said that one of the investor consortiums are more interested in setting up the facility near Greater Noida, while another one has been proposed in Gujarat. A third option is near Bangalore where an information technology investment region ( ITIR) spread over 42 square kilometres is being set up.
Setup of production unit in India :
India has been an important centre for chip design and verification, fabrication is almost non-existent here primarily due to high setup costs involved and some other problems like unavailability of state-of-the-art technologies,etc. If the chip-making facility is set-up, it would help create a large vendor base and eventually attract further foreign investment.
Commerce & industry minister Anand Sharma confirmed that talks were under way but did not disclose details. He told TOI that the move was part of the government’s drive to reduce dependence on import of products and shift to local manufacturing to deal with the problem of current account deficit.
“Chip-making requires water supply and high quality power, which need massive investments. Besides, globally companies locate facilities where governments offer certain benefits,” said a high-ranking officer. Taiwan, South Korea and China have used concessions to attract investors.
The government burdened with huge current account deficit is speeding its processes in attracting more dollar inflows to the economy. The production and fabrication units will initially be provided with concessions such as granting relief of Rs. 60,000 crore over 13 years, which will include a three-year construction period and the first 10 years of operations.
This is India’s second attempt to attract chipmakers into the country after an earlier bid failed five years ago. In 2007, the government had announced a package to woo investors but had to revise it last year to make it more attractive. Intel and SemIndia were companies that had shown interest. Even this time Planning Commission has certain reservations but the issue is set to be decided by the Union cabinet.
Hence soon this production unit will be setup in India by IBM .