Maha Announces Adani-Israel Tower
Semiconductor $10bn Panvel Project
This
is the second instance that a semiconductor unit has been announced first at
the state-level, before the Centre cleared it.
·
Ministry
of Electronics and IT (MeitY) has not yet approved
Tower and Adani’s semiconductor unit, but the two have applied for subsidy
under the Centre’s Rs 76,000 crore India Semiconductor Mission.
·
A
second foundry in the same year after approving a fab by the Tatas and Taiwan’s
Powerchip.
·
Vedanta-Foxconn
chip plant, which was to first come up in Maharashtra, but then moved to
Gujarat, before the partnership between the two ended in 2023.
·
The
announcement as an election-linked move by the state government.
·
The
government has exhausted its entire subsidy amount on various projects.
·
Adani
and Tower’s chip plant has been approved by the Maharashtra government to be
set up in Panvel of Raigad district. It will entail a
total investment of Rs 84,947 crore ($10 billion).
The
Maharashtra government’s announcement late Thursday that it had approved a $10
billion chip plant to be jointly set up by Israel’s Tower Semiconductor and the
Adani Group, caught many in the industry and some in Delhi’s policy circles by
surprise. The key question was whether the state government had jumped the gun,
with concerns around what would happen to central subsidies if the proposal
does not get clearance from the Centre’s technical committee.
MeitY approval pending
Senior
central government officials said that the Ministry of Electronics and IT (MeitY) has not yet approved Tower and Adani’s semiconductor
unit, but the two have applied for subsidy under the Centre’s Rs 76,000 crore
India Semiconductor Mission, with the government’s technical committee yet to
complete its evaluation. This means that at this stage, the plant has not been
approved by the technical committee of the Central government for subsidies
under the Centre’s scheme — with work on the plant unlikely to start without
the Centre’s approval, and subsidy commitment.
In
fact, neither Adani Enterprises nor Tower Semiconductor had made any public
announcement regarding their plant, at the time of publication. The Centre,
too, had not issued a statement. On Thursday, Gautam Adani also delivered a
lecture at a college in Mumbai, but made no mentions about the chip plant. The
Adani Group did not respond to a request for comment.
For
many, the uncharacteristic lack of acknowledgement, especially at the Centre,
about India managing to secure a second foundry in the
same year after approving a fab by the Tatas and Taiwan’s Powerchip, raised more questions than answers
about the announcement by the state government.
Centre’s
chip incentive plan
As
per the Centre’s chip incentive scheme, entities approved for setting up
semiconductor units in the country can secure as much as half of the total
capex subsidies needed for it. It is widely understood that without this fiscal
support, companies may not be willing to set up shop in India given its
nascent, and almost non-existent chip ecosystem. It is unclear whether state
governments could have similar financial bandwidth.
For
some officials in Delhi, the surprise announcement seemed reminiscent of the Vedanta-Foxconn chip plant, which was to first come up in
Maharashtra, but then moved to Gujarat, before the partnership between the two
ended in 2023, ending any hopes for that plant. At the time, the proposed
plant’s shifting base from Maharashtra to Gujarat had also ignited a political
storm.
However,
a senior government official said that the one key difference between the
Vedanta-Foxconn and Tower-Adani plans is that the former did not have any
experience or technology for making chips. Tower is an established, albeit small,
name in the chip business and has the technology to make some legacy nodes.
Eye
on elections
Many
are also seeing the announcement as an election-linked
move by the state government. A senior industry executive who is aware of
the details of Adani and Tower’s plan said that the two are not expecting the
Centre’s clearance to come up any time soon, primarily because the government has exhausted its entire subsidy amount on
various projects. “The reason it was announced by the Maharashtra
government is certainly keeping an eye on the upcoming Assembly elections. The
plant, in any case, will take at least seven years to function, and work will
only happen when the central subsidy is approved,” the executive said.
Adani and Tower’s chip plant has been
approved by the Maharashtra government to be set up in Panvel of Raigad district. It will entail a
total investment of Rs 84,947 crore ($10 billion) in two phases and is expected to create
15,000 jobs.
“Tower
Semiconductor company and Adani Group would jointly launch a mega-project of
semiconductor manufacturing at Panvel (District
Raigad). There would be investment of Rs 58,763 crore in first phase and Rs
25184 crore in second phase, thereby a total of Rs 83,947 crore generating
employment to 15,000 persons,” a press release issued by the government stated.