Semicon 2.0: Govt Bars Chip Plants From Selling or Mortgaging Assets Until Full Commercial Production

New Delhi, Sep 18 (KNN) Chip plants approved under the government's Semicon 2.0 programme will not be allowed to sell, dispose of or mortgage project assets until commercial production of the entire project is declared, according to guidelines issued on Thursday.

The government has notified Semicon 2.0 with an incentive outlay of Rs 1.27 lakh crore to strengthen India's semiconductor ecosystem.

Prior Approval Required for Asset Transactions

Under the guidelines, companies receiving support cannot sell or dispose of project assets, or create any mortgage, lien or charge through hypothecation or otherwise, until commercial production of the entire project is declared, PTI reported.

Exceptions will apply to transactions undertaken in the ordinary course of business, while other asset-related transactions will require prior approval from the Nodal Agency.

Units receiving fiscal support must also remain in commercial production for at least three years from the date of commencement of commercial production of the entire project and provide an undertaking to this effect.

Six Pillars Under Semicon 2.0

Semicon 2.0 has six pillars covering semiconductor design, machines and materials, setting up additional fabs, strengthening the ATMP and OSAT industry, research and development, and talent development.

Guidelines have so far been issued for three pillars — machines and materials, setting up more fabs, and strengthening the ATMP and OSAT industry.

Applicants under the machines and materials pillar can also avail production-linked incentive benefits for components and sub-assemblies sourced domestically and produced in India.

Land, R&D Costs Excluded

The guidelines specify that expenditure on land and its development, temporary structures, site offices, temporary office space and other temporary facilities at project sites will not qualify as eligible capital expenditure or investment.

Costs related to technology transfer, interest during construction and research and development will also be excluded from eligible capital expenditure under the scheme.

Promoter Ownership Required

Applicants, promoters or groups seeking incentives must collectively hold at least 51 per cent of the project company's equity share capital, along with equivalent voting rights, throughout the fiscal support agreement period.

This requirement will continue through the three-year operational period following the commercial operation date.

The controlling entity must be identified at the application stage, and its continuity will be a condition for continued fiscal support and compliance with the fiscal support agreement. Any change in shareholding during this period must be reported to the Nodal Agency.

(KNN Bureau)