Two consortiums, including IBM and STMicroelectronics, have proposed building semiconductor wafer plants in India costing a total of $8 billion, a minister said after the government approved concessions to lure chipmakers.
India, which wants local production of chips to cut long-term import bills, has renewed a drive to attract investments after a previous attempt failed.
The government hopes other chipmakers will show interest in building further plants after the federal cabinet on Thursday approved concessions including subsidies on capital spending, interest-free loans and tax breaks, Communications and Information Technology Minister Kapil Sibal said.
"India needs not less than 15 fabs (fabrication units)," Sibal told reporters on Friday.
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He said that given the huge investments, long build-up period of plants and low freight costs to import chips from abroad there is "no great interest,"and the only way to attract investments was through offering such major concessions.
Ganesh Ramamoorthy, a research director at Gartner, said there was little incentive for chipmakers to come to India.
"Globally there are established fabs that are struggling to maintain their profitability," Ramamoorthy said.
"Will they be exporting it, will they be competing with other global fabs, or will India be generating enough demand ... these are difficult questions," the analyst added.
Detailed reports in two months
The minister said the two consortiums would be asked to submit within two months their detailed project reports, including the production mix and marketing plans. The detailed project reports would be evaluated by a third party, he said.