Semiconductor body seeks govt reforms ahead of budget

by CXOtoday News Desk    Feb 20, 2013

The India Electronics and Semiconductor Association (IESA), a body representing the Indian Electronic System Design and Manufacturing (ESDM) and Semiconductor industry, presented their recommendation to the Government of India for the Union Budget 2013 – 14. The IESA’s recommendations cover two primary areas, namely Electronic System Design & Manufacturing (ESDM) and semiconductor design.

In its proposals relating to ESDM, the IESA has recommended the government encourage domestic electronics manufacturing and product development—building the domestic electronics industry is a very important item for national agenda, from security, self-reliance as well as future business potential. There is an urgent need to take actions to stimulate the domestic electronics industry and build brand India by encouraging locally designed products for local and global markets, opined the trade body.

“For India to achieve self-sufficiency in electronics, the Government of India needs to focus on: policies that enable India to become self-sufficient in making globally competitive electronics products. Given the talent in the country, I see no reason why India cannot become a global leader in electronics in the near future,” said Satya Gupta, chairman, IESA.

“The ESDM industry presents a $400 billion opportunity by 2020. Semiconductor content is increasing in the Bill of Materials (BoM) of electronic products. India has emerged as one of the leading countries in the semiconductor design, with 23 of the top 25 MNCs having their design centres in here. The semiconductor design industry generated revenues of $8.8 billion in 2011 and has witnessed a robust growth of 17.3% since 2009. Hence, we urge the government of India to take proactive steps to encourage this sunrise industry,” said P V G Menon, president, IESA.

In their Proposals for semiconductor design the IESA has made the following recommendations:

Incentives for R&D
• The Indian semiconductor design sector needs to be extended fiscal and regulatory support to grow. Semiconductor fabrication entails large capital investment of the order of few billion dollars, depending upon the technology node, which can only be looked at by large corporates, with requisite support from the Government. Currently there is no state-of-the-art chip fab facility in the country, which can cater to commercial applications exposing India to both strategic and supply chain risks.

• The IESA proposes that R&D benefits under Section 35(2AB) of the Income Tax Act be extended to the semiconductor design companies and that the current condition that this benefit be available only to the in-house design centres of manufacturing companies may be waived

• These measures will immensely benefit the establishment of a large number of semiconductor design companies, which will help realize the important objective of NEP-2012 to achieve turnover of $ 55 billion in semiconductor design by 2020.