Tata Electronics, CG Power, and HCL Group have collectively committed ₹1.29 trillion to semiconductor fabrication and assembly projects under India's national chip initiative, the India Semiconductor Mission. The commitments began in January 2025 and represent the largest industrial capital deployment in India's electronics sector since the programme's launch in December 2021. Delhi will underwrite roughly 50% of approved project costs through direct subsidies, with disbursements tied to construction milestones and production ramp schedules.
Tata Electronics is constructing a ₹91,000 crore fabrication facility in Gujarat to produce chips on 28-nanometre and 40-nanometre nodes, targeting automotive and industrial applications. CG Power, the power equipment arm of the Murugappa Group, is building an outsourced semiconductor assembly and test (OSAT) plant in Gujarat with an investment of ₹7,600 crore. HCL Group has committed ₹31,400 crore across two facilities—one for OSAT services in Bihar and another for compound semiconductor fabrication in Madhya Pradesh. The Bihar facility is expected online by Q4 2026, the Gujarat plants by mid-2027. None of the companies has disclosed binding offtake agreements, but industry participants expect Tata's fab to anchor supply chains for Tata Motors and Mahindra & Mahindra's electric vehicle programmes.
The timing matters because India's electronics import bill reached $89.4 billion in fiscal year 2024, with semiconductors comprising $38 billion of that total. The government views domestic chip production as infrastructure—not industrial policy theatre—following supply shocks during the pandemic and geopolitical friction over Taiwan. The mission has approved eight projects to date, but only these three have committed construction capital at scale. Larsen & Toubro, another mission participant, has yet to announce funding for its proposed ₹50,000 crore fab in Gujarat, and two foreign-backed projects have stalled in due diligence.
The subsidy structure is performance-linked. Delhi disburses 15% of the approved amount upon financial close, 35% when fabrication equipment is installed, and the remainder across the first three years of commercial production. If a project misses its production target by more than 20% in any subsidy year, Delhi can claw back proportional funds. This mechanism has kept speculative entrants out but has also slowed approvals—only three of the eight projects have received first-tranche disbursements. Tata received ₹13,650 crore in Q1 2025 after clearing land acquisition and environmental hurdles. CG Power and HCL are expected to receive initial tranches by June.
Allocators should track three inflection points. First, equipment procurement announcements from Applied Materials and ASML, expected between April and July 2025, will confirm production timelines and node capabilities. Second, Delhi's fiscal position—its total subsidy liability across all eight projects exceeds ₹76,000 crore, and any delay in disbursements will cascade into construction schedules. Third, offtake agreements with domestic automotive and consumer electronics manufacturers, which will determine whether these fabs operate at 60% utilisation or 85%. Tata's fab, in particular, needs binding contracts with at least two anchor customers outside the Tata Group to justify its scale.
The compound semiconductor facility in Madhya Pradesh is the quiet wildcard. It targets gallium nitride and silicon carbide substrates for power electronics and RF applications—segments where China holds 70% global capacity. If HCL can ramp that plant to commercial volumes by 2028, it positions India as the only non-Chinese source of compound chips in South Asia. That plant's equipment orders are due Q3 2025.
The takeaway
Three Indian conglomerates have moved ₹1.29 trillion into chip fabrication, with government subsidies covering half and first production expected late 2026.
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