Chennai: The much awaited central government's policy for semi conductor industry to attract manufacturers semiconductors; displays including liquid crystan display (LCD), organic light emitting diode (OLED), PDP, other advanced micro and nano technology products and also assembling and testing units of the above products has been announced.

As per the policy an incentive of 20 per cent of the capital expenditure will be given if the unit is located in a special economic zone (SEZ) during the initial ten years and for units located elsewhere the incentive is 25 per cent during the first 10 years and a counter veiling duty on capital goods would be exempted.

In the case of semiconductor manufacturing (Wafer Fab) products, the threshold net present value (NPV) of investments would be Rs2,500 crore. The threshold NPV of investments in manufacture of other products would be Rs1,000 crore.

The union cabinet approved the incentive details on Thursday. The cabinet had given in-principle approval to the proposal given by department of information technology on January 11, 2007. The policy was delayed as the finance ministry was concerned with the huge outgo towards incentives. A typical unit would involve an investment of $3 billion.

Reacting to the semi conductor policy chairman & CEO, SemIndia said, "The policy announcement will give a major fillip to hitech manufacturing in the country and may lead to the same kind of achievements that the software policy did about 15 years back."

Expressing his satisfaction as a venture capitalist Bob Kondamoori, managing partner, Sandalwood Partners said, "The venture capital investor community has been waiting for a focused policy with right package of incentives for sometime now and this progressive policy will motivate many more investors like us to look at India as an attractive investment destination in this space." According to him, the government should also follow up this policy formation by creating the right mechanism to implement the policy measures.