Union Cabinet Approves ₹91,000 Crore Tata Electronics-PSMC Semiconductor Fab in Dholera

What Was Decided

In a significant step towards creating an indigenous semiconductor ecosystem in India, the Government of India approved a proposal from Tata Electronics to build a mega semiconductor fabrication facility in Dholera, Gujarat, in partnership with PSMC, with a total investment of up to INR 91,000 crores (~US$11bn) expected to generate over 20,000 direct and indirect skilled jobs. The Dholera fab was approved by the Union Cabinet on 29 February, under the government's Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India, with Taiwan's Powerchip Semiconductor Manufacturing Co (PSMC) as its primary technology partner. The same Cabinet meeting also cleared a linked OSAT (assembly and test) facility for Tata Electronics in Jagiroad, Assam, at an outlay of ₹27,000 crore.

The Scheme Under Which It Was Approved

The approval sits under India's central semiconductor incentive programme. This vision of AtmaNirbharta in electronics and semiconductors was given momentum by the Union Cabinet, chaired by the Prime Minister, approving the Semicon India programme with a total outlay of INR 76,000 crore for development of the semiconductor and display manufacturing ecosystem. Under the fab-specific scheme, the Scheme for setting up of Semiconductor Fabs in India provides fiscal support of 50% of the project cost on a pari-passu basis to approved applicants, with the structure and quantum of support negotiated by the India Semiconductor Mission and determined by the Expenditure Finance Committee chaired by the Secretary, Department of Expenditure.

Operative Details: Land, Capacity and Technology

The Tata group was allotted about 160 acres in Dholera to set up the fab, according to officials in the Gujarat state government. On payment terms, the Tatas were required to pay 25 per cent of the cost of land upfront, with the rest paid by the Gujarat government to the Dholera Special Investment Region SPV as subsidy.

On capacity and technology, Tata Electronics, in partnership with PSMC, is building a state-of-the-art, AI-enabled 300mm (12-inch) Fab in Dholera with an expected total monthly capacity of 50,000 wafers for Analog and Logic IC chips based on 28nm to 110nm technologies. The new Fab will manufacture chips for applications such as power management IC, display drivers, microcontrollers (MCU) and high-performance computing logic, addressing demand in automotive, computing, data storage, wireless communication and artificial intelligence. Industry minister Ashwini Vaishnaw stated at the time that the plant would produce 3 billion chips annually once up and running at full capacity, and will make chips ranging across 28nm, 50nm, 55nm and 90nm nodes.

Foundation Stone and Ground-breaking

On 13 March 2024, Prime Minister Narendra Modi laid the foundation stone through a virtual interaction for two facilities: a state-of-the-art semiconductor fab in Dholera, Gujarat, and a Semiconductor Assembly and Test (OSAT) Facility in Jagiroad, Morigaon, Assam. The Dholera ceremony was attended by Ashwini Vaishnav, Minister of Railways, Communications and Electronics & IT; Bhupendra Patel, Chief Minister of Gujarat; N. Chandrasekaran, Chairman, Tata Sons; Ankur Verma, President, Tata Sons; and Dr Randhir Thakur, CEO & MD, Tata Electronics. The groundbreaking came just fourteen days after the government approved Tata's proposal for the Rs 91,000 crore fab along with its Rs 27,000 crore OSAT facility in Assam. Alongside the Tata ceremonies, the groundbreaking for CG Power's OSAT facility with an investment of about Rs 7,609 crores in Sanand was also commenced that day.

Financing and Incentive Structure

Beyond the central fab scheme's 50% capital support, Gujarat layered its own incentives on the project. The state policy offers significant land subsidies for fab projects, including a 75% subsidy for the first 200 acres of land and a 50% subsidy for additional land. Gujarat also offers a Rs 2 per unit power subsidy and exemptions from electricity duty for semiconductor projects, alongside a state-level Semiconductor Policy providing capital expenditure subsidies to attract chip manufacturers.

Practical Effect and Current Status

The Cabinet decision converted a Vibrant Gujarat Summit announcement into a funded, government-backed project. N Chandrasekaran, Chairman of Tata Sons, had announced Tata Group's decision to build a semiconductor fab in Dholera at the 20th Vibrant Gujarat Summit in January 2024, and the Cabinet approval on 29 February formalised that commitment with fiscal backing.

Construction has since progressed. Gujarat government officials confirmed that construction of the semiconductor plant by TEPL has already begun, with visible progress on-site, and the Tata-PSMC fab is scheduled for completion by the second quarter of the 2027-28 financial year, per the Gujarat government's timeline. Tata executives have indicated an accelerated target for first output: the company said it is accelerating a timeline typically of over four years, with the goal to produce the first chip in calendar year 2026. Supporting infrastructure has also been allotted, including 10 acres allotted by the Gujarat government to Tata for a housing project of over 500 apartments for the fab's workforce, and Dholera Industrial City Development Ltd (DICDL) auctioning plots to private developers for an additional 1,000 service apartments.

Wider Semiconductor Mission Context

The Dholera fab decision was part of a broader central programme. The India Semiconductor Mission is supported by an incentive framework of ₹76,000 crore, offering fiscal support of up to 50 per cent for silicon fabs, compound semiconductor facilities, assembly and testing units, and chip design. As of early 2026, under ISM 1.0 the government had approved 10 major projects with cumulative investments of roughly ₹1.60 trillion across six Indian states, with the Tata-PSMC Dholera fab remaining the flagship silicon fabrication project in that pipeline.