With the Tower Semiconductor $11-billion fab project being next in the line for approval, the government has said that it will not interfere in any ongoing legal tussle between the company and its former joint venture partner ISMC.

“Government’s intent is not to consider anything. If they (Tower-ISMC) have a contractual issue they will have to sort it out in the courts,” minister of state for electronics and IT Rajeev Chandrasekhar told Fe.

“Certainly, it’s not the government that will get into adjudicating disputes between two joint venture partners, if there is any,” he added.

It has been reported that ISMC Analog Fab had approached the government to not approve the semiconductor project application submitted by Tower Semiconductors. This is because Tower had earlier tied up with ISMC consortium to set up a semiconductor fab unit in the country and sought government’s approval on the project.

However, later, Tower solely submitted its application with the government to seek incentives under the semiconductor scheme, officials said. This, according to ISMC, was a breach of the agreement.

In 2020, ISMC had tied up with Tower to set up a fab unit in the country and had submitted an application to the India Semiconductor Mission. However, with the changes in the scheme structure and incentives by the government later, the companies were expected to jointly re-submit a proposal to the government. Tower later terminated the agreement with ISMC.

Tower Semiconductor’s project is currently under the evaluation stage. As per the process, companies whose applications are approved are entitled for a 50% subsidy from the government on the project cost. State governments are free to further top this up with any subsidy amount they want.

“It is a very important proposal that the government is examining and hopes to successfully get approved,”Chandrasekhar had said in a recent media briefing .

“It is a slightly more complex proposal because they looked at a longer period of build out. It’s a much larger fab that they are building. And it is one of the few foundry-led investments that is coming into the country,” Chandrasekhar added.

Unlike a joint venture model, Tower is looking at setting up a fabrication unit solely in the country, with a planned significant capacity of 80,000 wafers a month. The company is expected to explore partnership at a later stage.

On Wednesday, Prime Minister Narendra Modi laid the foundation stones of the three approved chip projects. The projects include – semiconductor fabrication unit by Tata group with Taiwan’s PSMC in Dholara, Gujarat; assembly, test, marking, and packaging (ATMP) facility at Morigaon, Assam, also by Tata group, and an outsourced semiconductor assembly and test (OSAT) facility by CG Power in partnership with Renesas.

Chandrasekhar said, “we will have 180,000 wafers per month capacity with the Tata fab project and post approval of Tower’s project, and SCL modernisation”.

The government is looking at incentives for semiconductor ancillary companies outside the existing Rs 76,000-crore policy and is expected to take up the same in the second round of semiconductor incentive policy, Chandrasekhar added.