new delhi the government on friday approved the setting up of two plants to manufacture semiconductor chips in india by two business consortia including israels tower jazzibm and stmicroelectronics at a cost of around rs 63412 crore semiconductor is a hardware component which is crucial to the functioning of various electronic devices such as transistors mobile phones computers and hitech defence equipment for instance tower jazz manufactures electronic chips that are used in apples iphones and samsungs galaxy smartphones one of the business consortiums consists of indias jaiprakash associates ibm and tower jazz it plans to set up a plant at a cost of rs 34399 crore near the yamuna expressway in up the other which consists of francebased stmicroelectronics hsmc technologies hindustan semiconductor manufacturing corporation and malaysias silterra will set up a plant in prantij in gujarat at a cost of rs 29013 crore according to a government statement it is expected that the final agreements regarding both plants will be signed by august this year the government has been working on a plan to reduce its costly import bill and manufacture some products which are imported the two plants are expected to help the country reduce its import bill by allowing manufacture of semiconductor chips locally they will also create direct employment opportunities for around 22000 people and indirect opportunities for a lakh more the government is offering 25 subsidy on capital expenditure tax breaks and rs 5124 crore to each plant as interestfree loans in a bid to attract chip makers the companies in the consortia will get all benefits listed under the national policy on electronics like modified special incentive package which allows up to rs 10000 crore in benefits under the 12th five year plan ending 2017 they will benefit under section 35 ad of it act and will also be allowed to deduct 100 expenditure made on research and development for development of electronic chips however invitations for bids for the plants by the department of electronics and it last year did not rake in more players except for the two consortia that were already in the reckoning to build the plants it is estimated that these chipmaking plants will have a huge impact on the development of electronics system design and manufacturing in the country according to various estimates indias demand for electronics products is slated to reach 400 billion by 2020 currently it imports more than 90 of consumer electronic products and the imports are set to reach 300 billion by 2020 from just 7 billion last year