India Advances Semiconductor Ecosystem: Fiscal Support Agreement Signed for ₹7,600 Crore OSAT Facility in Gujarat

The project will see CG Power and Industrial Solutions Ltd. establish a state-of-the-art OSAT (Outsourced Semiconductor Assembly and Test) facility in Sanand, Gujarat.

In a major milestone for India's semiconductor manufacturing ambitions, the India Semiconductor Mission (ISM) signed a Fiscal Support Agreement (FSA) with CG Power and Industrial Solutions Ltd. and CG Semi Pvt. Ltd. on January 17, 2025. This agreement is a pivotal step under the Modified Programme for Development of Semiconductor and Display Manufacturing Ecosystem, aligning with India's vision to establish itself as a global semiconductor powerhouse.

The project will see CG Power and Industrial Solutions Ltd. establish a state-of-the-art OSAT (Outsourced Semiconductor Assembly and Test) facility in Sanand, Gujarat. The initiative involves partnerships with Renesas Electronics America Inc. and Stars Microelectronics (Thailand) Public Co. Ltd., bringing a total investment of ₹7,600 crore.

Key financial support includes:

• 50% fiscal support on a pari-passu basis for eligible CAPEX provided by the India Semiconductor Mission.
• Strong governmental backing at all stages of implementation to ensure smooth progress.

Commitment to Global Semiconductor Value Chain

The project underscores the Indian government’s commitment to bolstering the nation’s position in the global semiconductor ecosystem. Addressing the signing ceremony, the Secretary of ISM praised CG Power for its deep understanding of the sector and its rapid strides toward implementation. He highlighted the importance of nurturing domestic intellectual property (IP) and a robust domestic market to achieve India's ambitious $500 billion electronics production target by 2030.

Industry Leaders Share Perspectives

Sh. Vellayan Subbiah, Chairman of CG Power and Industrial Solutions Ltd., lauded the agreement as a transformative step for India’s semiconductor landscape. He emphasized:

• India’s substantial contribution to the global semiconductor design workforce (nearly 20%).
• The critical need for homegrown semiconductor brands and IP.
• The simultaneous development of demand-driven growth alongside a strong semiconductor supply chain.

Sh. Sushil Pal, CEO of India Semiconductor Mission, praised CG Power’s collaboration and promptness in finalizing the FSA. He noted the broader impact of such projects on technological innovation, job creation, and economic growth.

Broader Implications

The OSAT facility is poised to:

1. Enhance India’s high-tech manufacturing capabilities.
2. Generate significant employment opportunities.
3. Solidify India's position as a trusted partner in building a sustainable and resilient global semiconductor value chain.

Looking Ahead

This landmark agreement is expected to drive innovation in the sector, attracting further investments and partnerships while propelling India toward self-reliance in semiconductor manufacturing. It is a crucial stride toward positioning India as a global leader in advanced technology and electronics by 2030.