India’s semiconductor ambitions gain momentum with Rs 1.75 lakh investment proposals

After years of observing the global semiconductor race from the sidelines, India is now poised to evaluate and allocate support for semiconductor proposals amounting to USD 21 billion or Rs 1.75 lakh crore. Tower Semiconductor Ltd. from Israel has proposed Rs 75,000 crore, while Tata Group, a prominent Indian conglomerate, has submitted an Rs 66,500 crore proposal for a chip fabrication unit, both earmarked for Prime Minister Narendra Modi’s home state of Gujarat.

Geopolitical Significance

Semiconductors have emerged as a critical geopolitical battleground, with major powers like the US, Japan, and China heavily investing in domestic capabilities. Modi government aims to position India as a global manufacturing hub by attracting international chipmakers, thereby reducing reliance on costly imports and bolstering the burgeoning smartphone assembly industry.

Government Incentives

Under India’s chipmaking incentive plan, the government plans to cover half the cost of approved projects, with an initial budget of approximately Rs 83,000 crore (USD 10 billion) allocated for this purpose. Despite previous setbacks, including the collapse of a high-profile partnership between Vedanta Ltd. and Foxconn Technology Group, India remains committed to fostering a robust semiconductor ecosystem.

Private Sector Initiatives

The Modi administration’s financial incentives have already attracted significant investments from tech giants like Apple Inc. and Alphabet Inc.‘s Google, facilitating the establishment of manufacturing and assembly facilities in India. Additionally, the semiconductor fund has enabled US-based Micron Technology Inc. to set up a Rs 23,000 crore assembly and testing facility in Gujarat.

Proposed Projects

Tower Semiconductor aims to scale up its plant over a decade to eventually produce 80,000 silicon wafers per month, marking a significant milestone for semiconductor manufacturing in India. Tata Group, on the other hand, plans to collaborate with Taiwan’s Powerchip Semiconductor Manufacturing Corp. for its project, which includes the construction of a chip-packaging plant in eastern India.

Implications for India’s Tech Landscape

These proposed semiconductor projects align with Tata Group’s broader strategy of investing billions of dollars in high-tech businesses. With plans for smartphone component manufacturing and potential partnerships with Apple suppliers, Tata Group seeks to solidify its position in India’s burgeoning tech ecosystem.

Government Approval and Disclosure Requirements

All chip proposals require approval from Modi’s cabinet, which is expected to come within weeks. To qualify for state subsidies, applicants must provide detailed disclosures regarding technology partnerships, financing plans, semiconductor types, and target customers.

India’s Geopolitical Positioning

Modi’s government aims to leverage India’s geopolitical clout to become a key partner for American tech ambitions amid ongoing tensions with China. By presenting India as a stable democracy and reliable investment destination, the government seeks to attract international investors interested in the semiconductor sector.

In conclusion, India’s semiconductor ambitions are gaining momentum with significant investment proposals and government support. These initiatives underscore India’s determination to establish itself as a major player in the global semiconductor industry, with the potential to reshape the country’s tech landscape and bolster its geopolitical standing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.