THE deal with Micron during PM Modi’s visit to the US has made headlines as a major technological breakthrough and a new dawn for India’s electronics chip-making industry. Implicit in this hurrah for the Micron deal is that India

[…]

So what is the Micron deal? Micron is a major manufacturer of memory chips, and it is this realm of business that has made it one of the world’s leaders in the semi-conductor industry. It would have the necessary credentials if it decided to set up a memory fabrication plant in India […]. But that is not what Micron is offering. It has offered to set up a plant in Gujarat to only “assemble, package and test” chips that Micron has fabricated elsewhere. Micron has such chip fabrication plants in the US and also in China, whose products, the chips will be packaged and tested in India.

[…]

The total cost of setting up the plant is estimated to be $ 2.75 billion, with the central government providing a 50 per cent subsidy and the Gujarat state government throwing in another 20 per cent. Micron is investing only 30 per cent of the total capital! In other words, Micron will hold 100 per cent ownership in a plant costing $2.75 billion, in which they would have invested only 0.825 billion! Even industry reports – e.g., eeNews Europe – calls this an “extreme level of subsidy”.