Semiconductor policy: Andhra CM to seek PM intervention

Andhra Pradesh chief minister Y S Rajasekhara Reddy will be once again seeking the Prime Minister's intervention on the much awaited semiconductor policy, which is being examined by the Union finance ministry for quite sometime now. Reddy is leaving for a one-day visit to Delhi tomorrow.

Officials involved with the Fab City said here on Tuesday that the chief minister had decided to press for the immediate announcement of the Centre's policy in the absence of which the potential investors in the proposed Fab City project were not able to finalise their plans.

While certain reports in the recent past had suggested that the Union finance ministry was totally against extending any sops to fab units, the state government officials, who briefed the chief minister on the delay in finalisation of the policy on Tuesday said it was the quantum and nature of sops that were being determined by the ministry and as such there was no opposition from the finance ministry to sops to semiconductor units.

Sources in the government, however, pointed out that the delay in finalising the policy was mainly on account of the finance ministry's reluctance to offer the same kind of subsidies to the other related industry as was being proposed by the Union IT ministry in the draft policy.

Meanwhile, CS Rao, chief executive officer of APInvest, the nodal agency for the Fab City project, said the assembly and testing facility proposed to be set up in the first phase by SemIndia Private Limited with an investment of $100 million would be ready by October 2007.

"A&T facility will be set up irrespective of whether the proposed semiconductor policy will be put in place or not. But a fab unit cannot do without the policy support from the Centre," Rao told Business Standard.

Officials are hopeful of getting a package of incentives, including equity participation and investment grant by the Centre to promote the semiconductor industry.

The Andhra Pradesh government has already formed a special purpose vehicle, Fab City SPV Private Limited, where the state government proposes to hold 5 per cent equity in the form of land, which is being offered for the project, while the Centre, SemIndia and a couple of other private players are expected to be the other stakeholders.