First chip plant should be a success: Chowdhry

Ajai Chowdhry, co-founder of HCL and adviser to the India Semiconductor Mission  (Mint)
Ajai Chowdhry, co-founder of HCL and adviser to the India Semiconductor Mission (Mint)


  • Govt panel is examining the fine print of all 3 proposals to build the plant

NEW DELHI : The government should take a cautious approach in approving the country’s first semiconductor plant as its success is critical given the Centre and state governments will together contribute a 70% subsidy for building it, said Ajai Chowdhry, co-founder of HCL and adviser to the India Semiconductor Mission (ISM).

“If India is going to give 70%, that project better work. If it fails, it reflects very badly on the Indian government for taking the wrong decision. So, it’s become a bit scary in some manner to take this decision. So, the government is being extra careful in taking the steps ahead and rightfully so, because 70% you’re giving, and if the project does not flower or work for India, it will be a big disaster," Chowdhry said in an interview.

Chowdhry said that ISM, the nodal body implementing the government’s semiconductor manufacturing plan, was going through the fine print of all three proposals of Vedanta-Foxconn, International Semiconductor Consortium (ISMC) and Singapore’s IGSS Ventures since none of them had come from existing semiconductor manufacturers, making sustenance of these plants that much more critical in the long term. ISM includes top minds in the semiconductor space, including Vinod Dham and Ajit Minocha.

“They’re (ISM) looking at their business plans. It should deliver results with a proper cash flow planned out. They’re looking at the mix of technology, leadership and funding. All proposals that have come are not from existing semiconductor manufacturers. That is the challenge… they’re being examined for experience. Whatever they’ve given is not perfect... their solutions are not complete, and that is why it’s taking time," he said.

Chowdhry’s comments come at a time the government has re-opened the window for fresh proposals under its $10 billion financial incentive scheme for setting up semiconductor fabrication units, even as existing proposals from private entities are yet to be approved. The government has clarified that the three consortia that applied last year can reapply.

Chowdhry added that the government had taken the right step in keeping the policy open and changing it to allow more mature nodes, beyond 40 nm, besides increasing the capital subsidy to 50% from 30%, making it the most attractive policy among countries like the US, Europe and China. He added that the ISM was also advising the existing investee companies to finetune their proposals.

Chowdhry added that India’s semiconductor plan should be de-politicized, where states and Centre should work together to set up specialized hubs, for instance, focusing on specific areas such as silicon semiconductor manufacturing in Dholera, Gujarat and compound semiconductor manufacturing in Karnataka. Such a strategy will avoid duplication of infrastructure and investments from potential players, and will attract more investments.

He added that more proposals need to come in the compound semiconductor space since India had huge requirements in sub-segments of power supplies for phones, computers, and electric vehicles. The investment in such plants would be in the range of $100-200 million versus billions of dollars needed for core semiconductor manufacturing.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.


Switch to the Mint app for fast and personalized news - Get App