Why Global Firms Finding It Difficult To Begin Their Semiconductor Units in India Amid Incentives and Schemes

By the end of 2026, the country anticipates that its semiconductor market would reach around $63 billion

Reports now surfaced that the global firms including the Foxconn Vedanta joint venture that bid for India’s Rs 76,000 Crore semiconductor PLI scheme are facing a lot hurdles to find a suitable technology partner, which according to the experts is a huge impediment to the nation’s ambitions to boost domestic chip manufacturing.

Also, ISMC, which is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor announced to establish a $3 billion semiconductor unit in the nation, also faced a challenge because Tower semiconductor was already acquired by the US based global tech firm Intel. Sources familiar with this matter have informed this to Reuters. In fact, the Foxconn Vedanta JV worth $19.5 billion plan to build semiconductors within India is also moving at a very slower pace as their partnership with STMicroelectronics is yet to be approved.

By the end of 2026, the country anticipates that its semiconductor market would reach around $63 billion, and a year back, it received three applications to set up semiconductor units under the PLI scheme. The Vedanta JV semiconductor factory is expected to commence in the Dholera region of Gujarat , while IGSS and ISMC ensured a $3 billion investment in two different southern states.

Sources told Reuters that the $3 billion investment plan by ISMC could not move further because Tower failed to sign its agreement with India after Intel planned to acquire it for $5.4 billion in 2022 and the deal is still pending under regulatory approval. Now, speaking about India’s ambitious semiconductor manufacturing growth, IT minister Rajeev Chandrasekhar told the media in an interview that ISMC cannot move ahead because of Intel’s acquisition of Tower and IGSS wanted their application to be re-submitted for incentives. Hence, “two of them had to drop out.”

Now, under the Modified Semicon India Program, the Ministry of Electronics and Information Technology (MeitY) has announced to invite new applications for establishing new semiconductor and display fabs in the country from June 01, 2023. India Semiconductor Mission will receive the applications. The government also announced a financial incentive of 50 percent of the venture cost to companies/consortia/joint ventures for beginning semiconductor fabs in the nation of any node, including mature nodes.


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