Announcing the policy, which came into effect on March 21, communications and IT minister Dayanidhi Maran said that the country can expect an investment of more than

Rs 24,000 crore in the next two-three years. “Leading manufacturers of semiconductors have shown an interest in India. The Indian eco-system can accommodate two-three semiconductor fabrication units, with an investment of $2-3 billion each. We have the choice to pick the best,” said Maran.

Lack of a policy had led the world’s largest chipmaker, Intel, to turn its back on India and go to Israel for setting up a fabrication unit. Now that a policy is in place, Maran said he would write to Intel chairman Craig Barrett and other stakeholders and begin negotiations.

The government will also set up an appraisal committee to which applications would be sent. The committee will then forward its recommendations to the Controller of Certifying Authorities who will give the formal approval.

The additional secretary of the Department of Information Technology will head the committee and the secretaries of the ministries of commerce and finance will be members.

Last month, the government had announced incentives for the manufacture of all semiconductors, displays, storage devices, solar cells and other advanced micro- and nano-technology products.

The incentives include a 20 per cent capital subsidy during the first 10 years for units located in SEZs and 25 per cent for units based outside SEZs. The threshold for investments is Rs 2,500 crore (about $500 million) for semiconductor products and Rs 1,000 crore for other products. Industry experts say the move will enable India to graduate from the current assembly-oriented operations to competitive manufacturing capabilities.

“The policy will give an impetus to the growth of the chip sector, electronics industry and the overall ecosystem. The domestic market for electronics goods is expected to reach $363 billion by 2015 and the domestic demand for semiconductors alone will be $43 billion,” said Poornima Shenoy, president of the India Semiconductor Association

Semiconductor device fabrication is the process used to create chips, the integrated circuits that are present in everyday electrical devices.