Two defence public sector units have entered the fray to jointly set up a semiconductor fab plant in India with an aim to achieve self dependency when it comes to electronics for strategic projects in military and space sectors.
The two PSUs, which are the main producers as well as consumers of electronics for the armed forces, seek to take advantage of the production-linked-incentive (PLI) scheme of the central government. They have tied up with Next Orbit Ventures and propose to set up a plant in Gujarat’s Dholera if the application is accepted by the government.
Sources said the decision to go in for a joint bid was taken as the PSUs would be able to reduce dependency on foreign suppliers for the building blocks of all electronics and would be able to innovate cutting edge products domestically. It would also enable the PSUs to design custom chips domestically for strategic systems like missiles and combat aircraft. Next Orbit Ventures did not comment on the matter citing the application process that was still underway.
ET has learnt that a third private sector entity, possibly from the automotive sector, could also be a partner to set up the manufacturing unit. Sources added that the technology partner is Israeli Tower Semiconductor that has recently been acquired by Intel. According to one official, the foreign partner has committed to procuring a large chunk of the fab units output itself.
It is learnt that the combined share of the two PSUs is likely to be just below 50% and the proposed plant could manufacture 40,000 wafers every month. In 2015, India had considered a proposal to make it mandatory for the strategic sectors of defence, space and atomic energy to use ‘made in India’ chips. As reported then by ET, Niti Ayog had been driving the plans but no firm decision was made.
A big factor was that ‘Made in India’ chips and electronics are necessary in national interest, given the dependence currently India has on imported products that can be rigged and bugged.