Gujarat is rapidly establishing itself as India’s premier semiconductor hub, thanks to af combination of policy incentives, abundant resources, and a thriving chemical industry. At the heart of this transformation is Dholera, which is an expansive urban development spanning 920 sq. km, twice the area of Mumbai. Strategically located along the Delhi-Mumbai Industrial Corridor (DMIC), Dholera is a top contender to house India’s first semiconductor fabrication plant (fab), spearheaded by Tata Electronics in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC).
The construction of this advanced facility is already underway and is expected to be completed by 2026. With an investment of Rs 91,000 crore, this AI-enabled fab will have the capacity to produce 50,000 wafers per month. This marks a major milestone for India as it seeks to reduce its dependence on imported semiconductors.
Meanwhile, in the north, Sanand, a once-sleepy town near Ahmedabad, is undergoing a semiconductor-driven transformation. The area, first recognised for hosting Tata’s Nano plant in 2008, is now bustling with activity as it gets ready to welcome three assembly and testing units, known in the industry as Assembly, Testing, Marking, and Packaging (ATMP) and Outsourced Semiconductor Assembly and Testing (OSAT).
Among the key players is Micron Technology, the American chip giant, which is investing 2.75 billion dollar to set up an OSAT facility in Sanand. Additionally, the Murugappa Group’s C G Power is partnering with Japan’s Renesas and Thailand’s Stars Microelectronics to establish a top-tier OSAT plant with an investment of Rs 7,600 crore.
Policy Support and Infrastructure: Gujarat’s Winning Formula
Gujarat’s rapid rise as India’s semiconductor hub is largely due to a strong policy framework. In 2021, the Indian Government announced the India Semiconductor Mission (ISM), and Gujarat was quick to follow suit with its own Semiconductor Policy in 2022. The state offers significant capital assistance, including 40 Pper cent of capital expenditure (CAPEX) covered by the state in addition to central support. For companies setting up in Dholera’s Special Investment Region (SIR), a 75 per cent subsidy on land purchases is available for the first 200 acres.
Gujarat also stands out due to its vast availability of land and lower prices compared to other regions, making it an attractive destination for large-scale projects. Additionally, the state’s well-developed energy infrastructure, which includes 23,550 MW of installed capacity from conventional sources and 16,588 MW from renewable sources, ensures the availability of surplus power critical for power-intensive semiconductor fabs.
Water availability, another essential component for semiconductor production, is being addressed through significant investments in desalination plants. The Gujarat Industrial Development Corporation (GIDC) has already commissioned India’s first desalination plant at Dahej, offering treated water at a competitive price, further boosting the state’s attractiveness for chip manufacturers.
The presence of a large chemical cluster in Dahej, which supplies 33 per cent of the speciality chemicals used in semiconductor manufacturing, is a key advantage for Gujarat. With the only working Petroleum, Chemicals, and Petrochemicals Investment Region (PCPIR) in India, the state is well-positioned to support the growth of the semiconductor industry by ensuring a steady supply of essential chemicals.
As Gujarat cements its position as India’s semiconductor hub, comparisons with Taiwan’s Hsinchu City, home to some of the world’s largest semiconductor companies, are becoming more frequent. Like Hsinchu, Dholera has the potential to attract global players and become a centre for semiconductor innovation, supported by infrastructure investments like the Ahmedabad-Dholera Expressway and the upcoming Dholera Airport.
Gujarat’s emergence as India’s premier semiconductor hub is indeed a significant development, driven by strategic investments, strong policy support, and a conducive environment for manufacturing. Here’s a deeper look at various facets of this transformation:
1. Dholera Smart City
Dholera is being developed as a smart city, designed to attract high-tech industries, particularly in the semiconductor sector. Its expansive area allows for integrated industrial, residential, and commercial spaces, promoting synergy among different sectors. The city’s infrastructure is being developed with a focus on sustainability, incorporating smart technologies for efficient resource management.
2. Investment Highlights
Tata Electronics and PSMC Collaboration: The partnership is significant not only because of the investment size (Rs 91,000 crore) but also because it marks a shift towards local semiconductor manufacturing, reducing reliance on imports.
Micron Technology’s OSAT Facility: With an investment of $2.75 billion, Micron’s facility in Sanand is poised to create thousands of jobs and stimulate local economies.
3. Policy Framework and Incentives
Gujarat’s Semiconductor Policy includes several incentives to attract companies:
Capital Assistance: The state government covers 40% of CAPEX, making it financially viable for companies to invest in large-scale facilities.
Land Subsidies: The 75% subsidy on land purchases in Dholera’s SIR for the first 200 acres is particularly attractive for companies looking to establish operations.
4. Infrastructure Development
Energy Infrastructure: Gujarat’s energy landscape, with a mix of conventional and renewable sources, provides a stable and sufficient power supply, essential for semiconductor manufacturing, which is highly energy-intensive.
Water Supply: The state’s investments in desalination technology, particularly the GIDC’s desalination plant, ensure a reliable water supply, a critical requirement for semiconductor fabs.
5. Chemical Industry Synergy
Gujarat’s chemical industry is a significant asset, providing specialty chemicals essential for semiconductor production. The concentration of chemical manufacturing in Dahej allows semiconductor companies to source materials locally, reducing logistics costs and enhancing supply chain reliability.
6. Logistics and Connectivity
The infrastructure projects like the Ahmedabad-Dholera Expressway and the upcoming Dholera Airport will enhance connectivity, facilitating easier movement of goods and people. These projects are expected to streamline logistics, making it easier for companies to operate in the region.
7. Comparison with Global Hubs
Hsinchu City: Often likened to Hsinchu in Taiwan, Gujarat aims to create a similar ecosystem that supports innovation and attracts global players. The comparison emphasizes the potential for Gujarat to become a center for research and development in semiconductor technology, akin to Taiwan’s well-established semiconductor ecosystem.
8. Future Outlook
As Dholera and surrounding areas develop, they are likely to see a significant influx of talent and investment, not just from domestic companies but also from global tech giants. This could position Gujarat as a critical player in the global semiconductor supply chain, especially as the demand for chips continues to rise with advancements in technology, including AI, IoT, and automotive electronics.
