The Indian government announced earlier today that it will offer incentives to hardware makers to set up fab units in the country. IBM and STMicro are being considered for a deal that is worth around $8 billion.
The federal government is set to offer lucrative incentives to chipmakers to set up shop in the country. They include subsidies on capital spending, interest-free loans and tax breaks. India’s Communications and Information Technology minister Kapil Sibal said in a statement earlier today that the country needs no less than 15 fab units.
Sibal said that offering such incentives was the only way to lure chipmakers to establish fabrication plants within the country. With India’s demand for electronics set to reach $400 billion by the year 2020, the government is looking to local manufacturing units to meet the estimated demand.
Consortiums that include the likes of IBM and STMicroelectronics have shown interest in establishing semiconductor wafer plants in the country. Sibal said that the two consortiums have two months to submit more detailed bids that highlight production and marketing plans.
The government has mentioned that IBM will act as the technology partner for India’s Jaiprakash Associates and Israel’s TowerJazz, who intend to create a fab unit near New Delhi for around $4 billion. The other consortium consists of India’s Hindustan Semiconductor Manufacturing Corp and Malaysia’s Silterra led by STMicroelectronics as the technology partner. This consortium is looking to establish a fab unit in the state of Gujarat.
According to the government, IBM and STMicroelectronics must hold a minimum stake of 10 percent, while the Indian government will hold an 11% stake in each project. The government will also fund the investment in part through interest-free loans for 10 years.