Intel puts $ 700m Wafer Testing Unit on Hold as Indian Government declines Tax Concessions for 15 years

“The company conveyed to the government last week that it would not be able to make the investment as the project would not be viable without the tax concessions. The company, however, said it would explore opportunities in the future,” an unnamed Intel official told Business Standard.

Intel had sought tax concessions from the Indian government before investing $700 million in a wafer-testing facility in the country. The concessions Intel sought included unlimited access to external commercial borrowings, tax waivers and an upfront payment of $100 million.

The view in the government was that providing concessions over and above those available in special economic zones could set a precedent for other foreign companies. There is also a view that the concessions sought are not commensurate with the level of activity that will take place at the proposed Intel facility.

In short the government thought that the value-addition was not enough to set a precedent and Intel decided to put its plan on hold.