Incentives and Support for Semiconductor Startups in Karnataka

The document outlines the incentives available for startups in the semiconductor sector in India, with a focus on the Karnataka Electronics System Design & Manufacturing Policy 2017-2022. It details various incentives provided by the Karnataka government, including electricity duty exemption, capital subsidy, interest subsidy, land-related incentives, and more. Additionally, it highlights the role of Chartered Accountants in helping startups avail these incentives. The incentives cover a wide range of aspects including financial, infrastructure, skill development, research and development, patent registration, international marketing, and more. The document also includes a comparison of incentives provided by different states.

Summary of Incentives

Incentives Available For Startups In Semiconductor Sector

INTRODUCTION

India, with its large consumer base and growing economy, has witnessed a surge in demand for electronic devices. However, the country heavily relies on imports to meet this demand, especially for semiconductors.

Semiconductor Incentive Scheme: Key Objectives

• Financial Incentives
• Infrastructure Support
• Research and Development (R&D)
• Skill Development

Silicon is used widely in semiconductor sector, but India imports it as the demand for silicon in various industries often exceeds domestic production capacity.

As a result, India imports silicon to meet the needs of its manufacturing industries, including the semiconductor sector.

Moving on this article focuses on various policy initiatives taken by state governments of India. Let’s move on to incentives provided by Karnataka State.

Karnataka Electronics System Design & Manufacturing Policy 2017-2022

The Government of Karnataka, facilitated by the Karnataka Biotechnology and Information Technology Services (KBITS), has unveiled the ESDM Policy 2017-22. This policy entails ecosystem facilitation and a spectrum of incentives and concessions tailored for Electronic System Design and Manufacturing (ESDM) enterprises operating within the state.

To avail these incentives/concessions, an ESDM company must be registered with DIT/KBITS as a KESDM company.

The company or entity should be registered in Karnataka under the Karnataka Shops and Commercial Establishment Act, 1961.

Let's explore the array of incentives provided by the Karnataka government specifically tailored for entities operating within the semiconductor sector.

1. Patent Registration Incentive

2. International Marketing Incentive

3. R&D Grant

4. Capital Subsidy

5. Reimbursement of Quality Certification Costs

6. Reimbursement of Prototyping Costs

7. Interest Subsidy

8. PF/ESI Incentive

9. Exemption from Payment of Stamp Duty and Concessional Registration Charges

10. Reimbursement of Land Conversion Fee

11. Power Tariff Concession

12. Subsidy for Setting up ETP

Steps To Avail The Benefits

1. Register the company for KESDM recognition.

2. Download and fill the form for relevant incentive and submit it along with supporting documents to KBITS Office

3. KBITS will review the application and verify the supporting documents.

4. After the application meets eligible criteria, physical inspection, if required, will be carried out.

5. After the physical inspection is carried out, the relevant certificate will be issued.

Karnataka Biotechnology and Information Technology Services (KBITS) collaborates with the Department of Information Technology and Biotechnology to facilitate and advance the Information Technology and Biotech sectors within the state. This is achieved through active involvement in organizing and participating in a variety of events including roadshows, trade shows, conferences, symposia, and seminars at both national and international levels.

Role Of Chartered Accountants In Helping People Avail These Incentives

CA’s play an important role in this aspect.

For availing incentives, the documents required include various certifications by Chartered Accountants. Some of them are listed below:

Chartered Accountants play an important role in bridging the gap by providing education to people. By leveraging their expertise in finance, taxation, and regulatory compliance, CA’s can provide valuable support to startups seeking to avail incentives offered by state governments for the semiconductor sector and other industries.

In the forthcoming article, we will conduct a comparative analysis of the incentives offered by Karnataka in contrast to those provided by other states. This examination aims to assist you in selecting the optimal location for establishing your semiconductor company.