PT-365 Eco Handout ppt 3 economic status.pdf

about economy related
SOFR
is the main replacement for Libor in the
United States. This benchmark is based on the
rates U.S. financial institutions pay each
other for overnight loans.
• These transactions take the form of Treasury
bondrepurchaseagreements, otherwise
knownasreposagreements. Theyallowbanks
to to meetliquidity and reserve requirements,
using Treasurys as collateral. SOFR comprises
the weighted averages of the rates charged
in these repo transactions
Ameribor- TheAmerican
Interbank Offered
Rate
(Ameribor) is a benchmark interest rate
that reflects the true cost of short-term
interbank borrowing. This rate is based on
transactions in overnight unsecured
loans
conducted ontheAmericanFinancial
Exchange(AFX).
•
€STR- €STR stands for the Euro Short-Term
Rate, which is the benchmark rate at which
Europeanbanksengagein unsecured
euro-denominated short-term lending Ameribor- TheAmerican
Interbank Offered
Rate
(Ameribor) is a benchmark interest rate
that reflects the true cost of short-term
interbank borrowing. This rate is based on
transactions in overnight unsecured
loans
conducted ontheAmericanFinancial
Exchange(AFX).
•
€STR- €STR stands for the Euro Short-Term
Rate, which is the benchmark rate at which
Europeanbanksengagein unsecured
euro-denominated short-term lending
Alternate Investment Fund
• Alternative investment funds are privately pooled
investment vehicles that operate outside of
traditional investment opportunities.
• Managedbyprofessional fund managers and
investment firms, these funds aim to generate income
by investing in non-traditional asset classes such as
private equity, hedge funds, real estate, infrastructure,
commodities and venture capital.
• Theyare not open to the public at large, and
minimum investment amount is mandated at Rs 1
crore
Alternate Investment Fund
• Alternative investment funds are privately pooled
investment vehicles that operate outside of
traditional investment opportunities.
• Managedbyprofessional fund managers and
investment firms, these funds aim to generate income
by investing in non-traditional asset classes such as
private equity, hedge funds, real estate, infrastructure,
commodities and venture capital.
• Theyare not open to the public at large, and
minimum investment amount is mandated at Rs 1
crore
Category I alternative investment funds are
close-ended funds with a lock-in period of
three years. These funds invest in start-ups,
social ventures, small and medium-sized
enterprises (SMEs), or other sectors that have
high growthpotential and are of economic
importance to the country.
• Venture Capital/Angel Funds/Infrastructure
Funds/Social Venture Funds
Category I alternative investment funds are
close-ended funds with a lock-in period of
three years. These funds invest in start-ups,
social ventures, small and medium-sized
enterprises (SMEs), or other sectors that have
high growthpotential and are of economic

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2. •SOFRisthemainreplacementforLiborinthe
UnitedStates.Thisbenchmarkisbasedonthe
ratesU.S.financialinstitutionspayeach
otherforovernightloans.
•ThesetransactionstaketheformofTreasury
bondrepurchaseagreements,otherwise
knownasreposagreements.Theyallowbanks
totomeetliquidityandreserverequirements,
usingTreasurysascollateral.SOFRcomprises
theweightedaveragesoftheratescharged
intheserepotransactions.
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3. •Ameribor-TheAmericanInterbankOffered
Rate(Ameribor)isabenchmarkinterestrate
thatreflectsthetruecostofshort-term
interbankborrowing.Thisrateisbasedon
transactionsinovernightunsecured
loansconductedontheAmericanFinancial
Exchange(AFX).
•€STR-€STRstandsfortheEuroShort-Term
Rate,whichisthebenchmarkrateatwhich
Europeanbanksengageinunsecured
euro-denominatedshort-termlending.
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4. •SONIA-TheSterlingOvernightIndexAverage
(SONIA)istheeffectiveovernightinterestrate
paidbybanksforunsecuredtransactionsin
theBritishsterlingmarket.Itisusedfor
overnightfundingfortradesthatoccurin
off-hoursandrepresentsthedepthof
overnightbusinessintheU.K.financial
marketplace.
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5. AlternateInvestmentFund
•Alternativeinvestmentfundsareprivatelypooled
investmentvehiclesthatoperateoutsideof
traditionalinvestmentopportunities.
•Managedbyprofessionalfundmanagersand
investmentfirms,thesefundsaimtogenerateincome
byinvestinginnon-traditionalassetclassessuchas
privateequity,hedgefunds,realestate,infrastructure,
commoditiesandventurecapital.
•Theyarenotopentothepublicatlarge,and
minimuminvestment amountis mandatedatRs1
crore.
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6. •CategoryIAIF:
•CategoryIalternativeinvestmentfundsare
close-endedfundswithalock-inperiodof
threeyears.Thesefundsinvestinstart-ups,
socialventures,smallandmedium-sized
enterprises(SMEs),orothersectorsthathave
highgrowthpotentialandareofeconomic
importancetothecountry.
•VentureCapital/AngelFunds/Infrastructure
Funds/SocialVentureFunds
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7. •CategoryIIAIF
•CategoryIIalternativeinvestmentfundsare
fundsthatinvestinavarietyofstocksand
bonds.SEBIdefinesCategoryIIAIFsasthe
fundsthatdonotfallunderCategoryIandIII
andwhichdonotundertakeleverageor
borrowingotherthantomeetday-to-day
operationalrequirements.
•Thesecanbeclose-endedonlywithalock-in
periodofthreeyears.
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8. •CategoryIIIAIF
•CategoryIIIalternativeinvestmentfundsare
proprietaryprivatefundsthatusecomplex
anddiversetradingstrategiessuchas
arbitragetrading,margintrading,futuresand
derivativestradingtoachievethegoalof
generatingshort-termprofits.Thesefunds
aimtoprovideinvestorswithshort-term
returns.
CategoryIIIalternativeinvestmentfundscan
bebothopenandclose-ended.
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9. •Alternativeinvestmentfunds investmentoptionis
open forforeignersandNRIs.
•Theminimumcorpusrequirementforeachschemeis
Rs20CroreandRs10croreforangelfunds.
•Theminimumamountofinvestmentbyaninvestoris
Rs 1crore.However,incasetheinvestorhappens to
bean employee,director, or fundmanager ofan AIF,
he/shecaninvestaminimumofRs.25lakh.
•Themaximumnumberofinvestorsallowedtoinvest
undertheCategoryIAlternativeinvestmentfundsis
1,000andinangelfundsis49.
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10. •AIFTaxationRules
•Following arethe taxationrulesof AIFsforeach
category.
•CategoryIandCategoryIIarepass-throughvehicles.
Thefunddoesn’thavetopayanytaxonitsearnings.
However,theinvestorshavetopaythetaxattheir
respectivetaxslabs.Ifthefundhasanycapital
gainsonstocks,thentheinvestorshavetopay15%or
10%dependingontheholdingperiod.
•CategoryIIIAIFsaretaxableatthehighestincometax
slablevel(42.7%)atthefundlevel.Thereturnsgiven
toinvestorsareafterdeductingthetax.
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11. •CDMDF,analternativeinvestmentfund,willact asa
backstopforpurchaseofinvestment-gradecorporate
debtsecurities.Itwillenhancesecondarymarket
liquidity bycreating apermanent institutional
frameworkforactivationintimesofmarketstress.
•Duringnormaltimes,CDMDFwilldealinlowduration
government securities(G-sec),treasurybills,tri-party
repoonG-secsandguaranteedcorporatebondrepo
withmaturitynotexceedingsevendays.
•CorporatedebtsecuritiestobeboughtbyCDMDF
duringmarketdislocation includelistedmoney
marketinstruments,forwhichthelong-termratingof
issuerswillbeconsidered,
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12. •Oncethemarketdislocationisdeclaredbytheregulator,theIM
wouldliquidateCDMDF’sexistingportfoliocreatedduringthe
normaltimes.Thecreditfacilityfromthebankswouldbeused,
andtheoverallcashavailable(capitalfromunits’holdersplus
creditfrombanks)canbedeployedinthecorporatebondmarket.
•Onlyinvestmentgradecreditinstrumentsincludinglistedmoney
marketinstrumentstobeboughtbytheFundfromthespecified
open-endeddebtschemesofmutualfunds,wherethereis
liquiditystressinthemarket,butthecreditqualityisgood.
•Therearealsoprudentialnormsprescribedbytheregulatorwhich
theFundwouldfollowintermsofbuyingofdebtsecuritiesi.e.,
notmorethan5%oftheamountavailable(FundCapitali.e.,
corpusplusmaximumpermissibleleverage)withsingleissuer
andnotmorethan7.5%withissuersfromthesamegroup.
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13. •CDMDFwillbuyonlyinvestment-gradesecurities
fromsecondarymarkets,listedandhaving
residualmaturityofuptofiveyears.
•Itwillnotbuyanyunlisted,
below-investment-gradeordefaulteddebt
securitiesorsecuritiesinrespectofwhichthere
isamaterialpossibilityofdefaultoradverse
creditnewsorviews.
•Itwillbuyatafairprice(adjustedforliquidity
risk,interestrateriskandcreditrisk)butnotat
distressprice.Thesellersofdebtsecuritiesshall
bepaid90percentoftheconsiderationincash
and10percentintermsofunitsofCDMDF.
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14. •TheunitsofCDMDFwillbesubscribedbyAMCsofmutualfunds
andspecifieddebt-orientedMFschemes–open-endeddebt
orientedmutualfundschemesexcludingovernightfundsandgilt
fundsandincludingconservativehybridfunds.
•Specifieddebt-orientedmutualfundschemeswillinvest25basis
points(bps)oftheirassetsundermanagement(AUM)inthe
unitsofCDMDF.
•AMCswillmakeaone-timecontributionequivalenttotwobps
oftheAUMofspecifieddebt-orientedmutualfundschemes
managedbythem.
•AMCsofnewmutualfundswillalsomakeaone-time
contributionequivalenttotwobpsoftheirspecified
debt-orientedMFschemes,basedontheAUMattheendofthe
financialyearfollowingtheoneinwhichthespecifiedschemes
arelaunched.
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16. DeemedExports
•Theobjectiveofthedeemedexportschemeisto
extendthebenefitsorincentivesenjoyedby
exporterstosupplierswhoeithercontributeto
exportsindirectly(forexample,asupplierwho
supplieshisgoodstoanexport-orientedunit)or
supplierswhocontributetospecified
infrastructureprojects.
•ThepolicyaimstoempowerIndia’sdomestic
industryagainsttheimportofgoodsbyproviding
duty-freeinputsandbenefitsorexemptionson
taxesordutiespaidinIndia.
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18. •Followingare the conditions defined in FTP for any
transactiontoqualifyas“deemedexport”
–OnlygoodscanqualifyasDeemedExport.Servicesdonot
qualify.
–TheproductionofgoodsmusttakeplaceinIndia.
–ThegoodsshouldnottransportoutsideIndia.
–ThegoodsmustbenotifiedbytheCentralGovernmentas
deemedexportsunderSection147oftheCentralGoods
andServicesTaxAct,2017(CGSTAct)
–ThetransactioncanbeinIndianRupeesoranyother
convertibleforeignexchange.
–ThegoodssuppliedasDeemedExportcannotbeprocessed
underaLetterofUndertaking(LUT)orabond.
–TheGSTleviedonthegoodsshouldbepaidatthetimeof
supply.Afullrefundonthistaxcanbeclaimed.
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19. •Inadditiontotheseconditions,thesupplyofgoodstothe
followingistreatedasDeemedExport:-
–IfthegoodsaresuppliedtoapartythathasanAdvanceAuthorisation
(AA)/AdvanceLicense,suchatransactionqualifiesasadeemedexport.
–IfapersonregisteredunderGSTsuppliesgoodstoanExportOriented
Unit(EOU)/ElectronicHardwareTechnologyParkUnit(EHTP)/
SoftwareTechnologyParkUnit(STP)/Bio-TechnologyParkUnit(BTP).
–TransactionsmadeagainstDuty-FreeImportAuthorisation(DFIA).
–IfcapitalgoodsaresuppliedtoarecipientwhoisaholderofanExport
PromotionCapitalGoodsAuthorisation(EPCGscheme),thetransaction
qualifiesasdeemedexport.
–GoodsthataresuppliedforUNprojectsaswellasnuclearpower
projects.Goodsthataresuppliedforprojectsthatarefundedby
bilateralormultilateralagencies.
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20. •Givenbelowarethevariousbenefitsassociatedwithdeemedexports.
–Manufacturersofdeemedexportscanavailofaspecialimportlicenseata
specialrate.Thisrateis6%ofthefreightonboardvalue,i.e.theFOBvalue.
–Variousunitsinindustrieslikefertilisers,nuclearpowerprojects,power,and
petroleumareeligibleforarefundonthedutywhichischargedonimports.
–Deemedexportsenjoyarefundoftheterminalexcisedutyasperthedetailsin
Schedule4ofthe1944centralexciseact.
–Advancedauthorisationforayearlyrequirement.
–Inthecaseofanadvancereleaseorderwherethemerchandisehasbeen
delivered,thesuppliercanobtainbenefitsofthespecialimprestlicenseaswell
asthedeemedexportdrawbackscheme.
–Iftherecipientshaveazero-dutyEPCGlicense,thesupplierscanbenefitfromall
thesaidschemesexceptthespecialimprestlicense.
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21. •However,deemedexportsarenotzero-rated,and
henceGSTisleviedonthegoodsthatqualifyas
deemedexports.Thesuppliercanavailofafull
refundofthistax.
•MerchantExports
•Merchantexportsinvolvemerchandisethat
exportersacquireandexporttoothercountries.
Merchantexportersbuyproductsfromdomestic
manufacturersaswellasfromoverseas
manufacturers.Theyrepackagetheseproducts
andexportthemundertheirexportbrand.All
theassociatedrisks,ifany,arebornebythem.
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22. •WhatisAdvanceAuthorisationScheme
–AdvanceAuthorisationSchemeallowsdutyfree
importofinputs,whicharephysicallyincorporatedin
anexportproduct.Inadditiontoanyinputs,
packagingmaterial,fuel,oil,catalystwhichis
consumed/utilizedintheprocessofproductionof
exportproduct,isalsobeallowed.
–Thequantityofinputsallowedforagivenproductis
basedonspecificnormsdefinedforthatexport
product,whichconsidersthewastagegeneratedin
themanufacturingprocess.
–AdvanceAuthorisationcoversmanufacturer
exportersormerchantexporterstiedtosupporting
manufacturer(s).
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25. India-PTAs
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26. FTAsunderNegotiation
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27. InformationTechnologyAgreement
(ITA)
•TheoriginalInformationTechnologyAgreement
(ITA)wasreachedon13December1996,through
a“MinisterialDeclarationonTradeinInformation
TechnologyProducts”,atthefirstWTO
MinisterialConference,heldinSingapore.
•Itledtotheeliminationofimportdutieson
productswhichin2013accountedforan
estimatedUS$1.6trillion.
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28. •TheITAcoversalargenumberofhightechnology
products,includingcomputers,telecommunication
equipment,semiconductors,semiconductormanufacturing
andtestingequipment,software,scientificinstruments,as
wellasmostofthepartsandaccessoriesoftheseproducts.
•TheITArequireseachparticipanttoeliminateandbind
customsdutiesatzeroforallproductsspecifiedinthe
Agreement.
•BecausetheITAconcessionsareincludedinthe
participants'WTOschedulesofconcessions,thetariff
eliminationisimplementedonamost-favourednation
(MFN) basis.Thismeansthatevencountriesthathavenot
joinedtheITAcanbenefitfromthetradeopportunities
generatedbyITAtariffelimination
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29. •Underthetermsoftheagreement,themajorityof
tariffswillbeeliminatedonthe201productswithin
threeyears,withreductionsbeginningin2016.
•BytheendofOctober2015,eachoftheparticipating
memberswillsubmittotheotherparticipantsadraft
schedulewhichspellsouthowthetermsofthe
agreementwouldbemet.Participantswillspendthe
coming months preparing andverifying these
schedules.
•Theagreementalsocontainsacommitmenttotackle
non-tariff barriersintheITsector,andtokeepthelist
ofproductscoveredunderreviewtodetermine
whetherfurtherexpansionmaybeneededtoreflect
futuretechnologicaldevelopments.
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30. •TransactionsofuptoRs7lakhperannumper
individual,otherthanforpurchasingoverseas
tourprogrampackages,donotdrawanyTCS.For
example,ifanindividualspendsRs8lakhina
financialyear,s/hewouldnotbetaxedforthe
initialRs7lakhspend,butwouldbechargedas
pertheratecorrespondingtothenatureof
transactionfortheadditionalRs1lakhspend.
•Thisisnotapurpose-specificbutacombined
threshold;thatis,irrespectiveofthepurpose,if
anindividual’sremittancesexceedRs7lakh,it
wouldbeliabletotaxation.
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31. •ItwasproposedintheUnionBudgetthattheTCSfor
purchaseofoverseastourpackagesbeincreasedfrom5%
to20%iftheupperlimitisbreached.Thesamewasto
applyforpaymentsmadeforpurposesotherthan
education(whetherornotfinancedbyloan)andmedical
treatment.Theimplementationhasnowbeendeferredby
threemonths.
•Purchaseoftourpackages,atpresent,drawsTCSat5%
anddoesnothaveanythreshold.
•Thesamerateappliesfortransactionsexceedingthe
thresholdotherthanforeducation(financedbyloan).
•Nochangesweremadewithrespecttoremittancesfor
educationalpurposesandmedicaltreatment,bothwithin
andbeyondthethreshold.
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33. •Thegovernmentalsoannounced
thattransactionsfacilitatedusing
internationalcreditcardswhilebeing
overseaswouldnotfallundertheLRS
umbrellaandtherefore,willnotbesubjectto
TCS.
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34. CreditRatings
•Acreditratingagencyisanentitywhichassessesthe
abilityandwillingnessoftheissuercompanyfortimely
paymentofinterestandprincipalonadebtinstrument.
•Creditratingisanassessmentoftheprobabilityof
defaultonpaymentofinterestandprincipalonadebt
instrument.Itisnotarecommendationtobuy,sellor
holdadebtinstrument.
•Ratingonlyprovidesanadditionalinputtotheinvestor
andthe
investorisrequiredtomakehisownindependentand
objectiveanalysisbeforearrivingataninvestment
decision.
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35. •Theratingsareusedinstructuredfinancetransactionssuchas
asset-backedsecurities,mortgage-backedsecurities,and
collateralizeddebtobligations.Ratingagenciesfocusonthe
typeofpoolunderlyingthesecurityandtheproposedcapital
structuretoratestructuredfinancialproducts.Theissuersof
thestructuredproductspayratingagenciestonotonlyrate
them,butalsotoadvisethemonhowtostructurethe
tranches.
•Ratingagenciesalsogiveratingstosovereignborrowers.
Sovereignborrowersincludenationalgovernments,state
governments,municipalities,andothersovereign-supported
institutions.Thesovereignratingsgivenbyaratingagency
showsasovereign’sabilitytorepayitsdebt.
•Theratingshelpgovernmentsfromemerginganddeveloping
countriestoissuebondstodomesticandinternational
investors.Governmentssellbondstoobtainfinancingfrom
othergovernmentsandBrettonWoodsinstitutionssuchas
theWorldBankandtheInternationalMonetaryFund.
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36. CreditRatings
•Acreditratingagencyisanentitywhichassessesthe
abilityandwillingnessoftheissuercompanyfortimely
paymentofinterestandprincipalonadebtinstrument.
•Creditratingisanassessmentoftheprobabilityof
defaultonpaymentofinterestandprincipalonadebt
instrument.Itisnotarecommendationtobuy,sellor
holdadebtinstrument.
•Ratingonlyprovidesanadditionalinputtotheinvestor
andthe
investorisrequiredtomakehisownindependentand
objectiveanalysisbeforearrivingataninvestment
decision.
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37. •Theratingsareusedinstructuredfinancetransactionssuchas
asset-backedsecurities,mortgage-backedsecurities,and
collateralizeddebtobligations.Ratingagenciesfocusonthe
typeofpoolunderlyingthesecurityandtheproposedcapital
structuretoratestructuredfinancialproducts.Theissuersof
thestructuredproductspayratingagenciestonotonlyrate
them,butalsotoadvisethemonhowtostructurethe
tranches.
•Ratingagenciesalsogiveratingstosovereignborrowers.
Sovereignborrowersincludenationalgovernments,state
governments,municipalities,andothersovereign-supported
institutions.Thesovereignratingsgivenbyaratingagency
showsasovereign’sabilitytorepayitsdebt.
•Theratingshelpgovernmentsfromemerginganddeveloping
countriestoissuebondstodomesticandinternational
investors.Governmentssellbondstoobtainfinancingfrom
othergovernmentsandBrettonWoodsinstitutionssuchas
theWorldBankandtheInternationalMonetaryFund.
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38. •Whatareinvestmentandspeculativegraderatings?
•Aninvestmentgraderatingsignifiestherating
agency’sbeliefthattheratedinstrumentislikelyto
meet itspaymentobligations. IntheIndian context,
debtinstrumentsrated'BBB-'andaboveare
classifiedasinvestmentgraderatings.
•Instrumentsthatarerated‘BB‘andbeloware
classifiedasspeculativegradecategoryratingsin
whichcasetheabilitytomeetthepayment
obligationsisconsideredtobe“speculative”.
Instrumentsratedinthespeculativegradeare
consideredtocarry materially higher riskand a
higherprobabilityofdefaultcomparedto
instrumentsratedintheinvestmentgrade.
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40. PM-PRANAM
•50%subsidysavingswillbepassedonasagranttothestatethatsaves
themoney
•70%ofthegrantprovidedundertheschemecanbeusedforasset
creationrelatedtotechnologicaladoptionofalternatefertilisersand
alternatefertiliserproductionunitsatvillage,blockanddistrictlevels.
•Theremaining30%grantmoneycanbeusedforincentivisingfarmers,
panchayats,farmerproducerorganisationsandself-helpgroups thatare
involvedinthereductionoffertiliseruseandawarenessgeneration.
•Governmentwillcompareastate’sincreaseorreductioninureaina
year,toitsaverageconsumptionofureaduringthelastthreeyears.Data
availableonafertiliserMinistrydashboard,iFMS(Integratedfertilisers
ManagementSystem),willbeusedforthispurpose.

42. •Afocusontheentireecosystem,notmerelyonone
fabricationunit.
•Theprogrammeenvisagesbuildingtheentire
semiconductorecosystem—fromdesignto
manufacturingtoassemblyandpackaging—insteadof
justfocusingononesemiconductorfabricationtostart
operationsinIndia.
•ThisarticulationissignificantbecauseIndia’s
comparativeadvantagehaslongbeeninsemiconductor
design;nearlyeverymajorglobalfirminthesectorhas
itsdesignhousehere.
•TheRs76,000crorepackagewillsupport
–100domesticsemiconductordesigncompanies,
–15compoundsemiconductorsandsemiconductorpackaging
units,
–twofabricationunits,and
–twodisplayfabs.

43. •A20-yearroadmap,notmerelyaone-offincentive
scheme
–ThepackageincludescreatinganindependentIndia
SemiconductorMission(ISM)ofglobalexpertsto“drive
thelong-termstrategiesfordevelopingsustainable
semiconductorsanddisplayecosystem”.
•Ashotinthearmfordomesticsemiconductor
designfirms
–ThoughIndiaisasemiconductordesignpowerhouse,
fewIndiancompaniesownthesedesigns’intellectual
property(IP).Inthisregard,anemphasison
semiconductordesignthroughthenewDesignLinked
Incentive(DLI)schemeforsemiconductordesignfirmsis
apositivestep.TheDLIschemeprovidesfinancial
incentivestohelpdomesticdesignfirmsobtaincostly
softwarelicenses(alsoknownasElectronicDesign
Automationtools)andreduceIPacquisitioncosts.

44. •Acleartargetoftwosemiconductorfabsand
twodisplayfabs
–Fabricationunitsrequirebillionsofdollarsof
recurringcapitalinvestment.Worldover,
governmentshaveplayedaroleinsharingthis
investmentburden.Theprogrammementionsfiscal
supportofupto50percentofthetotalproject
cost.Inthepast,thegovernmenthadcommittedto
anincentiveof25percentoncapitalexpenditure.
–Besidesfiscalsupport,thisstagealsorequires
high-gradepowerandwatersupply,subjectsthat
fallundertheremitofstategovernments.Another
positivestepisthecommitmenttoworkwithafew
stategovernmentstocreatesuitableinfrastructure
(land,uninterruptedwaterandpower).

45. •Incentivesfortheassembly,test,and
packagingstage
–Theoutsourcedassemblyandtest(OSAT)
segmentinthesemiconductorsupplychainisa
significantopportunityforalabour-abundant
countrylikeIndia.Theseunitsarenotascapital
intensivetosetuporrunasfabrication
facilities.Governmentsupportintheformof
financialsupportof30percentofthetotal
capitalexpenditurecanattractmajorOSAT
semiconductorcompaniestothecountry.

46. •NeedForDLI-
–Theschemeacknowledgesthatsemiconductor
designisIndia’scomparativeadvantage.Itsays
that:
•Nearly20%oftheworld’sdesignengineersareinIndia
•Indiahasathrivingsemiconductordesignecosystem.
–Theproblemsidentifiedundertheschemeare:
•Notalot ofIntellectual Property(IP) belongsto Indian
companies.Thisisproblematicascountriesareknownto
putstrictexportcontrolsinthisdomain.So,evenifa
foreigncompanyXhasadesignhouseinIndia,the
countrywhereXisheadquarteredcanforbidanIndian
customer from using theproducts made byX in India.
•Thecumulativerevenueofdomesticsemiconductor
designcompaniesisreallyreallysmall,lessthan₹150
crores.
•nospecificincentiveforsemiconductordesignfirms
earlier.

47. •ForcompanieswillingtoinvestaminimumofRs20,000crores
inalogic/memory/analog/Mixed-signalfabat<=65nminIndia,
theuniongovernmentiscommittingfiscalsupportofupto:
–50percentofprojectcostfor28nmorlower
–40percentofprojectcostfor28nmto45nm
–30percentofprojectcostfor45nmto65nm
•Applicationsareopenfor45daysinitiallystarting1Jan2022.
Supportwillbeextendedtoatleasttwoapplicantsforsix
years.
•Disbursementfromtheuniongovernmentwillmatchthe
capitalinvestmentsbyinvestorsatapredefinedratio,not
exceeding50percent.
•SelectionofapplicantswillbeonQualityandCostBased
Criteria(QCBS),notL1.Evaluationwillbedonebythenewly
proposedIndiaSemiconductorMission.Composedofindustry
experts,thisbodyistaskedwith“drivingthelong-term
strategiesfordevelopingsustainablesemiconductorsand
displayecosystem”.

48. •SchemeforsettingupofCompound
Semiconductors,SiliconPhotonics,SensorsFab
andSemiconductorAssembly,Testing,
MarkingandPackaging(ATMP),OSATfacilities
inIndia
–Theschemeprovidesincentivesforbroadlytwo
unrelatedthings.One,forspecialisedfabsusedto
manufacturehighfrequency,highpower,
optoelectronicdevices.
–Two,forunitsthatdoAssembly,Test,Marking,and
Packaging(ATMP)ofconventionalsilicon
semiconductorchips.

49. •SpecialisedFabsincludedunderthispolicyrelateto:
–compoundsemiconductors:Theuseofcompoundsemiconductorsis
expectedtogrowforhighvoltageapplications,LED-poweredappliancesetc.
•Forinstance,theuseofGaNforchargersisbeneficialasitcanoperateathigher
voltageswithoutconductionlosses.Theseproductsalsoswitchmoreefficiently,and
hencelowswitchinglosses.Theoveralleffectisthatdevicessuchaspowerchargers
canbemademuchsmallerusingcompoundsemiconductorsbecausetheheattobe
dissipatedismuchlower.Formore,readthisbySTMicro.
•GaAsisusedforSurface-mountedDeviceLEDsusedinourbulbs.Silicon
semiconductorsemitenergyintheinfraredrangeandhencearenotsuitablefor
suchapplications.
–SiPhoFab.SiliconPhotonicsallowsforhigherinterconnectspeeds,
supportinghigherdatarates.Alotofenergyininformationprocessing
apparentlyisusedupinthecommunications—notlogic—overachip
becauseconventionalinterconnectsneedtobedischargedandchargedfor
datatransfer.Opticalcommunicationoffershopehere.Formore,seethis
articleinPhysicsWorldThepromiseofsiliconphotonics–PhysicsWorld
–MEMS(MicroelectromechanicalSystems): expectedto find more
applicationsinhealthcare,EVs.

50. •ATMPunits:OSAT(Outsourced
SemiconductorAssemblyandTest)isa
stageoftheconventionalsemiconductor
productionprocess.
–ThisiswhereIndiahasapotentialadvantage
becauseoftheneedforalarge,mid-level
trainedworkforceforthisstage,incomparison
tologicormemoryfabs.Thisstagedoesrequire
high-endequipmentbuttherecurringcapital
investmentrequiredislesserthansiliconlogic
ormemoryfabs.Ofcourse,costmarginsare
alsolower.

51. •SchemeDetails
–Thespecialisedfabs,companiesorjointventures(notnecessarilyIndians)
withrelevantpastexperienceneedtocommittoaminimumcapital
investmentthresholdof₹100crores.Thecapacitycommitmentisroughly
500WaferStartsPerMonthfor150/200mmwafersize.Afterevaluatingall
applications,theuniongovernmentwillprovidefinancialsupportof30%
capitalexpenditure.
–FortheATMP,companiesorjointventures(notnecessarilyIndians)with
relevantpastexperienceneedtocommittoaminimumcapitalinvestment
thresholdof₹50crores.Afterevaluatingallapplications,theunion
governmentwillprovidefinancialsupportof30%capitalexpenditure.
–Tenure:theschemeisopenforapplicationsinitiallyforaperiodofthree
yearsstarting01-01-2022.
–Thedisbursementofthefinancialsupportbeginsafterthecapital
investmentthresholdhasbeencrossedandcommercialproductionhas
begun.

52. •SchemeforSettingupofDisplayFabsinIndia
–Further,thedocumentgoesontosaythatthereasondisplay
fabshaven’tsucceededis that manufacturers herefacea10%
costdisadvantagedueto“thelackofadequateinfrastructure,
domesticsupplychainandlogistics;highcostoffinance;and
focusonR&Dbytheindustry;andinadequaciesinskill
development.”Tocompensateforthisdisability, anindustrial
policyinstrumentofpart-financingtwodisplayfabshasbeen
conceived.
–MostofthedisplaypanelmanufacturersarelocatedinEast
Asia—companiesfromChina,Taiwan,SouthKorea,and
Japandominatethisindustry.
•displaysaccountfor25percentcostofmobiledevicesand50per
centcostofLED/LCDTVSets.
•TheLCDmarketisdominatedbyChinawhiletheOLEDmarketis
dominatedbySamsungandLG(bothSouthKoreancompanies).
•Thestrategiccaseseemstobetoreduceimportdependenceon
China.

53. •SchemeDetails
–ForcompanieswillingtoinvestaminimumofRs10,000
croresin manufacturing AMOLEDor TFT LCDscreens in India,
theuniongovernmentiscommittingfiscalsupportofupto50
percentoftheprojectcost.
–Applicationsareopenfor45daysinitiallystarting1Jan2022.
Support will beextendedatmost totwodisplayfab
manufacturers.
–Disbursementisfromtheuniongovernmentwillmatchthe
capitalinvestments byinvestorsatapredefined ratio, not
exceeding50percent.
–SelectionofapplicantswillbeonQualityandCostBased
Criteria(QCBS),not L1.Evaluation willbe doneby thenewly
proposedIndiaSemiconductorMission.Composedofindustry
experts,thisbodyistaskedwith“drivingthelong-term
strategies for developingsustainablesemiconductorsand
displayecosystem”.