Intel Corporation, the world's largest chipmaker, is likely to set up an advanced test manufacturing facility in India at an estimated investment of more than $400 million.
Indications to this effect were made available after a meeting between the visiting Information Technology Minister Dayanidhi Maran and Intel chairman Craig Barrett.
"They have more or a less decided to come to India. They need some more time to complete formalities, which, I am sure, they will," Maran, who is on a five-day visit to the US, told PTI in Silicon Valley on Wednesday.
During the meeting, designed to impress upon Intel the benefits of setting up the factory in India, the minister also handed over a letter from Prime Minister Manmohan Singh.
Over the past year, India has been aggressively lobbying firms, including Intel, to set up manufacturing units in the country. "I have been having this discussion with Craig for several months, since he came and met us about eight months ago," the Maran said.
The chipmaker was yet to determine which city to set up the facility in, with Chennai, Bangalore and Noida in the running. During early discussions, Intel had indicated that the plant would require an investment of about $400 million.
Although a number of multinationals have several software and chip design facilities in the country, none have set up labs in India.
Intel had shortlisted India and China as two possible locations for its next manufacturing facility and its decision to choose India should serve as a major boost for the country and is expected to have a really big multiplier effect.
With this move, the global leader in chip manufacturing will send a strong message that it is satisfied with the infrastructure in India, which should encourage other companies to follow suit.
Intel, a $34-billion company, has a development centre in Bangalore, which design and develop software to power chips that drive computers and high-end network for Internet based applications.
However, it does not have a full-fledged manufacturing plant in Asia, its fastest growing market. Currently the company manufactures chips in the US, Ireland and Israel.
Many industry analysts have been concerned that despite its success in software sector, it would be hard for India to realise its ambition of becoming a technological superpower without a semi-conductor manufacturing industry.
In addition, in view of the rapidly growing market in India, it is vital that the country develop a manufacturing base or it would be left holding a huge import bill for computer chips, most of which would come from China.
Maran, who explained to the Intel chairman various policy initiatives taken by his ministry to promote investment in IT hardware manufacturing sector in India, said the government was focussed specifically on manufacturing.
Maran said he had taken upon himself to get the manufacturing companies in IT and telecom sectors to set up facilities in India.
Maran, who has had significant success with telecommunications companies with Nokia and LG electronics investing millions of dollars in the country, sounded upbeat about his current trip to the Silicon Valley.
He said most of the companies he visited including CISCO and Applied Materials, are seriously considering India for expansion.
"I can say that India is at a critical stage of getting into manufacturing with every major manufacturer recognising the talent available in the country and also realising that India is a safer place to do business. They realise that their Intellectual Property Rights will be respected in India, where the courts are independent and not controlled by the government," the minister said.
"They understand that India spent a lot of money in building infrastructure, including telecom. My message is take advantage of India's potential and do not put all your eggs in one basket," Maran said.
He said it was not difficult for him to sell India to the Silicon Valley manufacturers because of the many successful Indians who have made it to the top. "It is their reputation that has helped me in getting my work done."
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