The Cabinet has given in-principle approval to the Telecom Ministry’s proposal of setting up two semiconductor manufacturing facilities in the country. The two fab projects were shortlisted from around 30 applications.

The two semiconductor wafer fabrication manufacturing units will be set up with an estimated cost of Rs 25,000 crore and the level of government support for these units will be decided through negotiation with chip makers.

Electronic chips are key components in various gadgets and devices like mobile phones. As per the estimates in National Policy of Electronics, the demand for electronics is likely to reach $400 billion (approx Rs 25,46,400 crore) by 2020.

The government has invited proposals to set up fabs in the country with the aim of attracting around $40 billion (approx Rs 2,54,640 crore) in foreign direct investment. Zero customs duty for importing semiconductor equipment and machinery for chips fabs was also proposed in the Union Budget 2013-14 to support semiconductor manufacturing in the country.