Tata Group’s Rs 25,000-crore chip project to soon get govt nod

The Tata Group’s Rs 25,000-crore semiconductor packaging plant in Assam, may soon get government’s approval, making it the first domestic firm to set up a chip plant in the country following the government’s Rs 76,000-crore incentive scheme for the sector. Once approved, it will be the second big semiconductor project to get approval after the $2.75 billion Micron’s assembly, testing, marking, and packaging (ATMP) project.

Minister of state for electronics and IT, Rajeev Chandrasekhar said on Thursday that the Group’s approval is in the final stages of evaluation after which it would be sent to the Cabinet for final clearance.  

The Group, under Tata Electronics, had in December submitted an application to set up an Outsourced Semiconductor Assembly and Test (OSAT) facility in Assam.

Unlike Micron, which is into manufacturing and packaging its own chips, Tata Electronics will be doing it for third-party and tie-up with a semiconductor technology partner. Basically, its project will be to get wafers, which is the raw form of chip, from global manufacturers, process them into chips, package them and then transport them globally to industries which use semiconductor in their products.

As per the process, only those companies whose applications are approved by the government are entitled to get a 50% subsidy from the government on the project cost. State governments where the projects are set up are free to top this up with any subsidy amount they want.

In January, Tata Sons Chairman N Chandrasekaran had said the group is also looking to finalise a semiconductor fabrication unit in Gujarat’s Dholera, with commissioning expected to commence shortly in this year.

Last year in October, the Tata Group acquired Taiwan-based iPhone contract manufacturer, Wistron Corp’s plant in Karnataka, making it the first domestic entity to manufacture iPhones.

As reported earlier, several semiconductor assembly and packaging projects are expected to be approved by the government before the dates for the parliamentary elections are announced.

Currently, four proposals for setting up semiconductor fabrication units and thirteen for setting up compound semiconductor fabs and assembly, testing, marking and packaging (ATMP) units by firms such as Kaynes Technology, CG Power, Foxconn-HCL JV, Hiranandani group, among others, are at the evaluation stage by a government-appointed committee. Projects submitted by companies are vetted by the India Semiconductor Mission (ISM) and approved or rejected based upon its recommendations.

On the semiconductor incentives, the government is expected to spend `6,900 crore in FY25, which is nearly five times higher than estimated spending of `1,500 crore in FY24.

According to FY25 budgetary estimates, of the `6,900 crore, the government will spend `4,200 crore on ATMP/OSAT projects, `1,500 crore towards fabrication units, `900 crore on modernisation of semi-conductor laboratory (SCL) and `300 crore on design-linked incentive and display scheme.