Semiconductor firms to invest ₹31,299 cr under ISM by FY27

Semiconductor companies that are eligible for incentives under the Indian Semiconductor Mission will collectively put in by FY27 ₹31,299 crore, which is nearly a fifth of the committed investment of about ₹1.65 trillion under the scheme, according to the estimates of the Ministry of Electronics and Information Technology (Meity).

Till FY26, investment by five semiconductor companies was ₹15,799 crore.

Meity has estimated that another ₹15,500 crore will be invested in FY27.

The scheme, launched in 2023, took off in FY25 when Micron’s project was cleared and the company started investing in its ATMP (assembly, testing, marking and packaging) plant in Sanand, Gujarat, from the same financial year.

Under the scheme, while the companies had to invest 50 per cent of the project cost, another 50 per cent was borne by the central government, and the state concerned also chipped in with 20 per cent of the cost of the project.

In the first two years under the scheme, FY25 and FY26, the five companies invested ₹5,692 crore in their projects while the rest was disbursed by the central and state governments.

The companies include Micron, which was the first to invest in FY25 and FY26 and has started commercial production.

The other projects are those of CG Power and Kaynes Semicon, apart from the two of the Tata group — the fab project in Dholera, Gujarat, and the OSAT (outsourced semiconductor assembly and test) project in Assam (in all of them investment began in FY26).

Kaynes has started commercial production while CG Power is expected to do so in July. The Tatas’ OSAT plant is slated to start by the end of this year.

In FY27 the government expects ₹7,000 crore to be invested by the semiconductor companies collectively (with the government providing the rest). The bulk of the investment will be in buying the equipment required in the plants.

A senior official in Meity said: “The machines account for 65 per cent of the cost of a plant. So we will see large investment in buying and installing them in the third and fourth year of the project. We will also review the investment in November this year. It could be even higher.”

The bulk of the investment under the scheme, ₹91,000 crore, is in the Tata fab plant. This accounts for 55 per cent of the committed investment. The plant is expected to be completed in 2028.

The scheme provided incentives of over ₹76,000 crore, most of which has been for around 12 projects.

These include two fab projects and 10 OSAT plants in the country. The two new projects which were recently cleared are a mini/micro LED (light emission diode) display module manufacturing project as well as an OSAT plant by Suchi Semicon.

The government is working on an ISM scheme 2.0, which is expected to have even a larger budget (around ₹1 trillion) and will focus on building the ecosystem for raw-material vendors required to support the fab and OSAT plants. Also under the electronic-component manufacturing scheme, incentives have been provided to support making equipment for the semicon industry. Business Standard