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From electronics to semiconductor, MNCs in search of policy stability

Global manufacturing majors seek a less unpredictable policy environment before investing more 'China-Plus-One' dollars in India

MNCs with permanent establishment to pay tax on pre-negotiated income

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6 min read Last Updated : May 21 2023 | 6:12 PM IST

Prodded by their automobile clients to hedge their bets against China global Taiwanese-headquartered outsourced semiconductor assembly and test companies (OSAT) are scouting for other Asian destinations to shift part of their production. Their favourite alternatives: Malaysia, Vietnam and the Philippines. Note, India is missing from that list. And this is despite an attractive financial incentive scheme for OSAT players.

The reason, said a senior executive of a US chip company who had a meeting in Taiwan just a few weeks ago, is that “they want more predictability in government policy because they plan to put in big money.” OSAT players, he argued, want some alignment by the Indian revenue department to global incentives offered in countries competing to attract foreign investment.

There is no doubt that the Indian government is leveraging like never before the opportunity opened up by geopolitical tensions between the US and China.