India's Semiconductor Mission May Get $10 Billion Boost for New Chip Projects

India's ambitious plan to strengthen its semiconductor industry, the Indian Semiconductor Mission (ISM), may soon receive a substantial funding boost of $10 billion. This comes as the government evaluates several potential projects, including a major semiconductor fabrication unit to be established by the Adani Group in collaboration with Israel's Tower Semiconductor in Maharashtra. According to a report by The Economic Times, this new funding could help accelerate the country's efforts to become a significant player in the global semiconductor market.

On September 5, the Maharashtra government approved a significant semiconductor manufacturing project involving a joint venture between the Adani Group and Tower Semiconductor. The proposed facility, to be located in Panvel, Mumbai, represents an investment of approximately Rs 83,947 crore (around $10 billion). This project is set to unfold in two phases, with Rs 58,763 crore allocated for Phase 1 and Rs 25,184 crore for Phase 2. Once operational, the plant is expected to create around 5,000 jobs and position Maharashtra as a key hub for semiconductor manufacturing.

The ISM, which has nearly exhausted its initial funds, was launched in December 2021 to advance India's capabilities in semiconductor design, manufacturing, and research. It initially offered a Rs 76,000 crore ($10.2 billion) chip incentive scheme, providing up to a 50% subsidy on capital expenditures for plant setups. To maintain momentum, an additional Rs 6,903 crore was announced in the interim budget for February 2024. However, with new projects being planned, additional funding is deemed necessary.

The approval of the Adani-Tower Semiconductor project in Maharashtra is expected to significantly enhance India's semiconductor production capacity, providing a critical boost to the country's digital economy. The plant will not only contribute to domestic needs but also position India as a competitive player in the global supply chain, which is currently dominated by countries like Taiwan and South Korea.

In March 2024, three major projects were approved under the ISM scheme, underscoring the government's commitment to developing the semiconductor sector. These include CG Power's proposed Rs 7,600 crore chip packaging facility in Sanand, Gujarat, in collaboration with Japan’s Renesas Electronics; Tata Group's Rs 27,000 crore chip assembly plant in Morigaon, Assam; and Tata Electronics' ambitious Rs 91,000 crore plant. These projects aim to create a robust infrastructure for semiconductor manufacturing and assembly, furthering India’s self-reliance in the technology sector.

The ISM's objective is to build a strong semiconductor ecosystem in India by facilitating investments in chip design, manufacturing, and research. This mission aligns with the government's broader goal of reducing reliance on imports and promoting local production in critical technology sectors. The additional funding boost, if approved, will provide much-needed support to achieve these objectives.

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As the global semiconductor market continues to evolve, India’s proactive steps towards enhancing its manufacturing capabilities are likely to attract both domestic and foreign investors. The Tower-Adani joint venture in Maharashtra is a significant milestone in this journey and reflects India's growing ambitions in the high-tech semiconductor industry.

Reference: MoneyControl