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Semicon industry's wishlist to the union gov't

Posted: 25 Feb 2010     Print Version  Bookmark and Share

Keywords:budget  semiconductor industry  Government of India 

On the eve of the union budget, here are some of the budget recommendations submitted by the India Semiconductor Association (ISA), via a memorandum to the Government of India. If the memorandum is favourably considered, the ISA and the industry believes it will greatly enhance the competitiveness of the domestic semiconductor industry.

The ISA has been making concerted efforts to boost the Electronics System Design and Manufacturing ecosystem (ESDM) in India and recognises the need for reforms to empower the domestic Electronic System, Design & Manufacturing sector.

B V Naidu, Chairman, ISA said, "There are huge growth opportunities for the electronic industry in India, but there have been some missed opportunities in the past decade. So while the future holds a lot of promise, we need to address existing challenges in infrastructure, taxation, supply chain and logistics, labour laws, R&D and funding. The budget recommendations which ISA has submitted to the Government of India, envision a robust ecosystem that will attribute to promoting the sector and enhancing the domestic offerings. This will eventually lead to growth".

The budget recommendations have been framed keeping in mind core areas of -

- Semiconductor design: VLSI design, embedded software and reference board design

- High-tech manufacturing—Amendments to the Semiconductor Policy 2007

- Promotion of domestic electronics manufacturing

- Tax and duty structure

- Encouraging pre-competitive research

Here is the viewpoint from the industry which re-iterates the memorandum's salient points.

"As we approach the Union budget for 2010, we expect the government to remove ambiguities and draft a clearer tax reform policy, that will facilitate faster and more equitable economic growth. In terms of the IT industry, we would like to root for the extension of income tax holiday referring to Section 10 (A) of Income Tax Act. The expiry of this provision coupled with the anti-outsourcing political legislation in the US could make India an uncompetitive off shoring destination," said Surjeet Singh, chief financial officer, Patni. We would also like to see some tax sops on R&D to accelerate progress on India's R&D and innovation activities."

Jaswinder Ahuja, corporate VP and managing director, Cadence Design Systems (I) Pvt Ltd re-affirms the ISA recommendations. As he puts it, " At a high level, the recommendations aim at extending some of the sops that already exist by 5 years, providing funding / grants and tax breaks, instituting measures to encourage electronics manufacturing for the domestic market and fostering research in technology and innovation through funding and other support."

"It is no more cost and volume game. Investments in Research and creation/ ownership of Technologies will be the differentiator for IT industry henceforth. Look for more tax incentives and subsidies towards such initiatives from the Government", says S. Janakiraman , president and CEO of MindTree Consulting.

Vivek Sharma, VP APAC-India operations, director design centre of STMicroelectronoics says," Provide a framework for the development of electronics industry and the manufacturing of electronics products in the country." He adds," Rationalize corporate tax structure in line with the international bench marks to keep India attractive for investments as are other developing countries e.g. transfer pricing for captive units of international companies should be aligned with international levels keeping their low business risk profile."

For more ISA related news, click here.

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