9.1 High-tech Parks
Large Technology Parks
should be set up with special promotional provisions
and incentives for manufacture of IT products.
of the Concessions/Incentives sought for High Tech Parks
Exemption of Interest Tax under Section 10(15)(iv) to
be amended to include high tech park megafabs.
a) for assessment
purpose consider unsold units as business assets.
b) Income on such
assets be assessed on actual accruals and not on
repairs be taken on actual basis and not on
Tax holiday under section 80 IA be extended to cover
Business assets of hightech parks including
residential units be exempted for wealth tax.
guidelines should be relaxed further. The average
tenor of the loan is stipulated as 7 years without
any option for prepayment. This needs to be reduced
to be an average tenor of 3 years with a provision
Domestic banking system should be encouraged to
finance approved hightech parks and not consider them
as a real estate activity. It may consider loan at
soft terms for this activity.
a) Import of
captive power plant by hightech parks be allowed
at the same rate as applicable to the power
generation project(resulting in duty reduction
from present 39.7% to 22%).
b) Import of
infrastructural facility like data/communication
networks being provided in the high tech park be
allowed concessional rate of import duty for
Chip Manufacture & Mega FAB
Efforts should be made to
locate chip manufacturing facilities in India in
collaboration with leading international partners.
1. The world IC
industry is presently US $140 billion which is
expected to grow to about US $ 270 billion by the
turn of the country.
2. The Indian
semiconductor production at present is about Rs.230
crores out of which IC production is about Rs.60
3. Given the
electronic equipment target production of Rs.55,000
crore by the terminal year of the ninth plan, the
optimistic market for ICs in India would work out to
be Rs.8,000 crores. Keeping in mind the shortfall in
equipment production, the lag of equipment designs,
the tied SKD assembly etc. the
pessimistic accessible IC market in India is expected
to be about Rs.3,500 crores.
4. India presently has
some strategic capability but very little commercial
capability in Ics.
5. There are chances
for India to progress in IC area in Bipolar Analog
Ics, Standard Logic ASICs, ASSPs etc. only if the
present constraints of policy, tax regime, industry
structure, finance costs, etc. are removed as
recommended in the Report.
6. Global scale
operations including exports are possible in India in
back end operations like assembly and test, and
design if the constraints are removed.
7. Fabs for basic
products are possible only if Government removes
constraints on inputs, creates infrastructure
specially for this area and takes special initiative
for attracting the multinational Joint-ventures.
Modern fabs for advanced VLSI including exports would
only be possible if multinationals are attracted to
place majority investments. This will require a
special package of incentives including financial
support in various forms.
8. If the constraints
are removed and Government takes initiatives for
encouraging joint-ventures for fabs, a target
production of about Rs.3,000 crores aimed by the
terminal year of the IX Plan can be aimed.
9. Government should
plan for establishing atleast two modern fabs as
joint ventures during the ninth plan period. In
addition to increasing the production by an order of
magnitude, this will promote the growth of chip
applications and emergence of new products and
advanced technologies in the country, encourage local
production of input materials, act as driving force
for improving infrastructure for high tech.
Industries and generate sizable export revenues in
the long run.
10. As the above plans
are executed and local activity in fabrication
increases, there will be a scope for an independent
mask-making facility. This can be accomplished viably
by spinning off into a separate facility the existing
mask units and upgrading the same.
11. Government should
create a resource facility for ICs for
providing processes imporved at R&D institutions,
trying out new ideas, prototyping of new products
beofre transferring to industry, human resource
development for microelectronics needs to be
undertaken through introduing proper courses at
graduate and post graduate levels, special courses,
training at the resource facility, training abroad,
industry consulting, etc.
development activity in various, institutions needs
to be strengthened for building up capabilities.
14. Funds to the tune
of Rs. 4,000-5000 crores need to be invested in the
country for upgradation of existing facilities,
establishing new modern production, establishment of
a resource facility, manpower training and technology
development. Government contribution needs to be of
the order of Rs.2,500 crore.
Indirect taxes on all electronic products to be
reduced to accelerate the market-Recognise
microelectronics as a vital core industry.
Import duties to inputs on microelectronics to be
Hi-tech infrastructure to be established as
Subsidised interest rates for microelectronics
Attract global investments by incentives as in
Restructure semiconductor sector by consolidation in
Fair and fast customs procedures and approvals.
For strategic projects like Mega-fabs, substantial
Strengthen technology development in R&D
Create a resource facility for IC prototyping and
To allocate Rs.2,500 crores in the Ninth Plan period
to this area.
of the concessions/incentives sought for Megafabs /
i) Exemption of
corporate income tax for certain years ten(10) years
with permission to carry forward losses and deduct
them as expenses for up to 5 years.
ii) In case units are
located in specified zones 50% reduction of income
tax for five years after the termination of normal
income tax holiday.
iii) Exclusion of
dividend derived from promoted enterprises from
taxable income during the corporate income tax
iv) Allowance to
deduct up to 25% of the investment cost on installing
infrastructural facilities from taxable corporate
v) Exemption or
reduction or major taxes including property tax,
sales tax, import duty etc.
depreciation allowance (the present rate is 25% which
could be enhanced to 33%).
vii) An allowance to
deduct from taxable corporate income an amount
equivalent to 5% of an increase in income derived
from exports over the previous years, excluding the
cost of insurance and transportation for 10 years
from the first date on which income is earned.
viii) An allowance
equal to double the cost of transportation,
electricity, water supply for deduction from taxable
corporate income for 10 years from the first day on
which income is earned.
Against state monopolization of the sale of product
similar to those produced by the promoted projects.
Against price controls.
Against tax exempted imports by Government or state
i) Procurement of
indigenous raw materials, components or any other
goods by the manufacturer be exempted for sales tax,
ii) Permission to
bring in foreign nationals to undertake investment
feasibility studies as also foreign &a234H
technic experts to work on promoted projects.
duties and policy to be at par with EPZ units.
iv) All import/export
consignments to be given green channel.