Tarun sharma
Mumbai: In the years to come India is all set to become an electronic hub as the government has geared up to create a vibrant policy for 'Fabless Design' Industry. The ministry of information technology and brodcasting has approved the proposal and has forwarded the draft report to cabinet for approval. Zee Business is in possession of the draft report.
Fabless Design is the design and sale of hardware devices and semiconductor chips while outsourcing the fabrication or "fab" of the devices to a specialized manufacturer called a semiconductor foundry.
India would be competing with countries like China, Taiwan and Japan. India is likely to have around 55 billion worth of demand for semi-conductor, chip and embedded software by 2020.
The government of India will offer slew of incentives to domestic chip and embedded software manufacturing companies. According to the draft report, the government will provide 200percent income tax benefit under Section 35 (2AB). The government will also offer 2percent export incentive under focus product scheme and along with this 5percent interest rate subvention on working capital loan.
As per the draft report, if a domestic company is applying for an international patent then the govt will pay 50percent of the cost of filing a patent license. The government will set up 10-member committee for this project including professors. The government will also set up Electronic Development Fund to support this project.
The government is keen to boost domestic fabless industry which is a small scale industry compared to to China and Taiwan. Currently 2000 chips are designed every year and only 20,000 employees work for the sector. The government is also keen to establish chip and software embedded business as there is a large scope for growth in the sector.
So far, there are 10 multi national companies that have been manufacturing chips and embedded software in the country. The IP of these companies are registered from overseas and hence India is not able to earn any single penny from this project.
The IT and Broadcast Ministry is mulling to set up an electronic hub in India as the demand for electronic good is about $400 billion. The demand for semi-conductor and chips have shot up to $80 billion, despite such whopping numbers India's contribution is negligible in this sector.
