BANGALORE — The ball will start rolling soon at long last for the two semiconductor manufacturing facilities in India. The Indian government is likely to give final approval within a week.
In September, the Minister for Communication and Information Technology announced an agreement in principle, but final approval was not forthcoming. However, reliable sources now say the seal will be stamped within a week.
The consortium behind one of the proposed facilities comprises IBM, India's Jaiprakash Associates, and Israel's Tower Jazz. The consortium behind the second comprises Hindustan Semiconductor Manufacturing Co. (HSMC), STMicroelectronics, and Silterra.
India's general elections are coming up in April or May, and the ruling party (Congress) took a beating in the Delhi Assembly elections in December. As a result, there has been apprehension within the industry that the proposed fabs may not get final approval, which is essentially needed for the two consortia to take their plans forward.
But sources tell us the final approval for the two manufacturing plants will come within a week. Once a general election date is announced, a code of conduct will prohibit ministers from sanctioning grants and related payments out of discretionary funds. Ministers and politicians will be barred from laying the foundation stones for new projects. Therefore, if the government is serious about the whole project, final approval for the fabs must be announced before the election date is revealed.
The Empowered Committee has sent the final note to the Cabinet and is awaiting final approval. After approval, the committee would give the consortia a letter of intent and request them to submit a detailed project report (DPR), which would place on record the roadmap that they would follow for establishing the fabs, plus the payments and incentives due to them.
The consortia would be given four weeks to submit the DPR. Appraisal and clearance from the government would take a couple of weeks. During that time, the consortia would form a special-purpose vehicle to incorporate the company under which the fabs would be set up, and the financial details would be shown. Once this is cleared, the letter of commitment would be given, and the groundbreaking ceremony would be held.
If approval is not announced soon enough, the house of cards will fall down. No one can predict the outcome of general elections, where the new Aam Aadmi Party has emerged as a dark horse.