State dangles sops before semicon firms

Karnataka, better known for its software and BPO industry, has announce a comprehensive semiconductor policy aimed at attracting electronics and hardware companies to the state. The policy which was announced on Friday, was made public during the Vision Summit organised by the Indian Semiconductor Association (ISA), has promised sops, financial assistances and all possible handholding by the state government to companies in the electronics systems and semiconductor space.

Unveiling the policy highlights, chief minister B S Yeddyurappa said, the policy was aimed at creating a new beginning in the decade and would be a role model for the rest of the states in the country. As per the policy, the state has made an additional provision of Rs 25 crore towards a 26 per cent contribution to the KITVEN IT Fund for raising funds from the market to assist start-up semiconductor units engaged in design and embedded software. The state has committed to set up ‘Karnataka Fund for Semiconductor Excellence’ with a corpus of Rs 10 crore to encourage research and development in chip design.

The state government has announced to provide financial assistance to firms for filing IP in accordance with the incentives provided in the industrial policy 2009-2014. To encourage semiconductor assembly, testing, marking and packing process (ATMP) units, the state government will provide incentives to such units in the state by lowering the threshold investment for ATMPs to Rs 400 crore from the present Rs 1,000 crore.

Karnataka, which exported software worth $15.5 billion last year, houses leading global semiconductor design firms. Bangalore, the IT hub of India, houses 23 of the top 25 global companies in the semiconductor space. Close to 30 per cent of the state’s software exports are related to high-end technology and semiconductor design.

The state will also set up a school focussing on semiconductor-related education at the Indian Institute of Information Technology, Bangalore (IIIT-B) for an investment of Rs 10 crore other providing Rs 5 crore to the institute Rs 5 crore for setting up a research lab. As a part of the fiscal incentives and concessions to the semiconductor industry, the government has announced to provide subsidy on investment promotion, exempt stamp duty and entry tax other than providing interest free loans among others.

“Bangalore is the biggest hub and an acknowledged global technological hub. To further strengthen the state’s leadership position, the state government is working in close association with ISA and semiconductor and design industry,” Yeddyurappa said.

Recently, the Karnataka government has approved setting up of an IT Investment Region (ITIR) near Bangalore International Airport, covering an area of about 40 square kilometres. The ITIR would be a fully-integrated IT township catering to IT, ITeS and electronic hardware manufacturing. All the ATMP units will be encouraged with special incentives in the proposed ITIR which will be announced separately by the government.