The Union Cabinet has approved the proposal to set up an Empowered Committee for identifying technology and investors for setting up two semiconductor wafer fabrication (fab) manufacturing facilities in the country.

The Empowered Committee includes Adviser to PM on Public Information, Infrastructure & Innovation; Chairman, National Manufacturing Competitiveness Council (NMCC); Secretary, Department of Expenditure; Member (Industry), Planning Commission and Dr. M. J. Zarabi, Former CMD, Semiconductor Complex Ltd.

The Empowered Committee will identify technology and potential investors for establishment of Semiconductor Wafer Fabs, and thereafter ascertain their interest in setting up of Semiconductor Fab facilities in the country; to assess and recommend the nature and Quantum of Government support such as equity/grant/ subsidy in physical/financial terms that may be required.

The Empowered Committee shall submit its recommendations to the Government by July 31, 2011.

A previous committee that had the Chairman, National Manufacturing Competitiveness Council, among other members, had made five recommendations:

• Set up semiconductor wafer fabrication facilities
  
• Create policies for preferential access to "Manufactured-in-lndia" "Indian Products" electronics goods for all government procurements and procurement by government licensees
  
• Set up a dedicated "Electronic Development Fund"
  
• Set up of a National Electronics Mission
  
• Encourage manufacture of specific high priority electronic product line in India by providing capital grant and creation of electronic manufacturing clusters

The recommendations of the Committee referred to above have been examined in detail in a series of inter-ministerial meetings and appropriate proposals are being evolved for approval of the competent authority on each of these recommendations.

Electronics hardware sector is capital intensive and is facing several disabilities and barriers. Therefore, the proposal will have significant impact in resolving these issues and help Indian electronics hardware industry to develop localized content and value addition.

The Rough Order of Magnitude (ROM) of investment for the two wafer fabs (Fab-1 and Fab-2) is estimated at to be 25,000 crore ($5 billion). The exact level of government support could be finalized by way of negotiations.

Two plants cleared

The Centre, on April 29, 2011, cleared two large semiconductor wafer fabrication plants. The two plants costing 7,500 crore (greenfield: 5,000 crore and refurbished: 2,500 crore) may be set up in public-private partnership. There is a big demand-supply mismatch in the electronics sector, government sources have said. In 2009, demand stood at $45 billion while domestic production was only $20 billion. Demand for electronics is expected to rise to $400 billion by 2020.