India Takes Major Step in Semiconductor Manufacturing
India is making significant strides in developing a robust semiconductor manufacturing ecosystem. On January 17, 2025, a Fiscal Support Agreement (FSA) was signed between the India Semiconductor Mission, CG Power and Industrial Solutions Ltd., and CG Semi Pvt. Ltd. This agreement is a crucial part of India’s strategy to enhance its semiconductor manufacturing capabilities. The collaboration focuses on CG’s OSAT (Outsourced Semiconductor Assembly and Test) facility, which has been approved under the Modified Programme for the Development of Semiconductor and Display Manufacturing Ecosystem. This initiative is expected to bolster India’s position in the global semiconductor value chain.
Investment and Collaboration in Semiconductor Manufacturing
CG Power and Industrial Solutions Ltd. is setting up its semiconductor OSAT unit in Sanand, Gujarat. This project is a partnership with Renesas Electronics America Inc. and Stars Microelectronics (Thailand) Public Co. Ltd. The total investment for this ambitious project is approximately ₹7,600 crore. The establishment of this facility is a significant move towards self-reliance in semiconductor manufacturing in India.
The project will receive 50% fiscal support on a pari-passu basis for eligible capital expenditures from the India Semiconductor Mission. This financial backing reflects the Government of India’s commitment to strengthening the country’s semiconductor sector. The collaboration aims to create a sustainable and efficient semiconductor supply chain, which is vital for meeting the growing demand for electronic components.
The OSAT facility is expected to have a production capacity of 15 million chips per day. This capacity will not only cater to domestic needs but also position India as a key player in the global semiconductor market. The government’s support and the involvement of established international partners highlight the importance of this project in the broader context of India’s economic growth and technological advancement.
Government Commitment and Industry Support
The Secretary of the Ministry of Electronics and Information Technology emphasized the government’s commitment to supporting the project at every stage of its implementation. He praised CG Power for its understanding of the semiconductor sector and its swift progress in establishing the facility. The Secretary also highlighted the significance of developing domestic intellectual property and market capabilities.
The government aims to achieve a production target of $500 billion in electronics by 2030. This ambitious goal underscores the importance of fostering a strong semiconductor industry in India. The collaboration with CG Power is seen as a vital step towards realizing this target. The Secretary expressed confidence that CG Power will play a crucial role in the electronics value chain, contributing significantly to the country’s economic landscape.
The signing of the FSA is viewed as a momentous occasion for India’s semiconductor industry. It marks a key step toward achieving self-reliance in manufacturing and design. The government’s proactive approach in facilitating such agreements demonstrates its dedication to building a sustainable and competitive semiconductor ecosystem.
Future Prospects and Economic Impact
The semiconductor project is poised to drive technological advancement and economic growth in India. By fostering high-tech manufacturing and creating employment opportunities, the initiative will strengthen India’s position as a trusted partner in the global semiconductor value chain. The collaboration between CG Power and international partners is expected to enhance India’s capabilities in semiconductor design and manufacturing.
Sh. Vellayan Subbiah, Chairman of CG Power, emphasized the need for India to nurture homegrown brands and intellectual property. He pointed out that while Indians make up nearly 20% of the global semiconductor design workforce, there is a pressing need to build a robust domestic supply chain. This project aims to address that need by driving demand alongside the development of manufacturing capabilities.
The successful implementation of the OSAT facility will not only benefit the electronics sector but will also have a ripple effect on various industries that rely on semiconductor technology. As India continues to invest in this critical sector, it is likely to attract more international collaborations and investments, further solidifying its role in the global semiconductor landscape.
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