Sops to semi-conductor industry

FE reports

The government is likely to give upfront equity commitment and sops to semi -conductor units set up in select locations, instead of support to all such units. Moreover, this support will have to be partly funded by state governments.

According to officials, a list of such locations will be drawn up soon and will be announced as a part of the proposed National Semi-conductor Policy. The information technology ministry has been demanding an upfront equity commitment from the government other sops including zero interest loans as well as income tax exemptions to all semi-conductor units. Finance ministry feels that such a move will have severe financial ramifications for the government. It is estimated that the equity component for such projects alone will be to the tune of Rs 1,200 crore. Officials have also pointed out that a 100% income tax exemption for 10 years would have a financial implication of around Rs 15,500 crore. In addition, excise duty reductions would also cost the exchequer around Rs 10,000 crore.