India approves two semiconductor wafer plants worth $10 billion

India has approved the setting up of semiconductor wafer plants by two consortia, including IBM Corp, Israel's TowerJazz and STMicroelectronics NV, costing a total of 634.1 billion rupees.

India, which wants local production of chips to cut long-term import bills, has renewed a drive to attract investments after a previous attempt failed. The two groups had proposed building plants in India in September.

One of the consortia is made up of Jaiprakash Associates Ltd and TowerJazz and IBM. It plans to set up a plant near New Delhi at a cost of 343.99 billion rupees, a government statement said on Friday.

The second comprises HSMC Technologies India Private Ltd, Malaysia's Silterra and STMicroelectronics. The group has proposed investment of 290.13 billion rupees for a plant in the western Gujarat state, the statement said.

The final agreements for the two plants are expected to be signed by August.

With a view to attract chipmakers to set up plants in India, the government is offering concessions including 25 percent subsidy on capital spending, tax breaks, and interest-free loans of about 51.24 billion rupees to each plant.

India's demand for electronics products is forecast to rise nearly 10 times during this decade to reach $400 billion by 2020, causing policy makers to worry that electronics imports, with no major local manufacturing, could exceed those of oil.

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