India’s $13.4 Bn Semiconductor Push: Guide to FDI Routes, JV, and 40% Capex Grants

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Overview: Following the official notification of the ₹1,27,500 Crore (~$13.4 Billion) Semicon 2.0 Scheme, India has significantly broadened access for international direct investment across silicon fabrication units, display facilities, packaging plants, and equipment manufacturing. Multinational enterprises and foreign investors can now leverage substantial capital expenditure subsidies alongside flexible Foreign Direct Investment (FDI) regulations

India’s newly notified Semicon 2.0 Programme creates an attractive operational landscape for multinational technology corporations, overseas institutional investors, and global component suppliers.

Delivering government capital support ranging between 25% and 40%, the policy framework actively invites global joint ventures, direct local subsidiaries, and supply-chain setups.

Key Investment Highlights:

  • Silicon Wafer Fab Grants: Global commercial enterprises establishing 300-mm silicon wafer fabrication units qualify for 40% direct fiscal capex support.
  • Advanced Packaging & OSAT Support: Cutting-edge packaging operations (2.5D/3D integration and heterogeneous packaging) receive 35% capex backing, whereas traditional packaging units receive 25% capex support.
  • Capital Equipment & Materials Subsidies: Facilities producing semiconductor machinery or high-purity raw materials secure 30% capex assistance, complemented by a 2% to 10% Production-Linked Incentive (PLI).
  • 100% Automatic FDI Access: Equity investments up to 100% are permitted via the automatic route for electronic hardware and semiconductor manufacturing setups.
  • Specialty Fab Incentives: Dedicated fabrication units focusing on compound semiconductors, photonics, micro-LED, and sensors obtain 35% capex support.

Frequently Asked Questions:

Can a foreign enterprise establish a 100% Wholly Owned Subsidiary (WOS) to claim fab subsidies?

Yes. Foreign companies can incorporate a local WOS via the automatic FDI route to construct manufacturing plants, provided they satisfy the scheme’s capex and technology thresholds.

What is the minimum capital threshold required to set up a Silicon Fab facility?

Silicon wafer fab applications require a baseline capital investment threshold of ₹20,000 Crore (~$2.1 Billion) along with established revenue and technological criteria.

What are the capital requirements for Packaging (ATMP/OSAT) units?

Projects typically must demonstrate a minimum capital expenditure threshold of ₹1,000 Crore (~$105 Million) to qualify under the official scheme guidelines.

SetIndiaBiz Professional Support:

SetIndiaBiz provides complete cross-border legal, tax, and corporate setup solutions for international firms and foreign investors launching operations in India:

  1. Wholly Owned Indian Subsidiary Incorporation and Branch/Project Office Setup.
  2. Reserve Bank of India (RBI) Regulatory Compliance, including FC-GPR reporting and Form PAS-3 filings.
  3. Cross-border Joint Venture Agreement (JVA) drafting and corporate restructuring.
  4. Industrial Factory Licensing, pollution approvals, and local regulatory submissions.

Establishing your semiconductor manufacturing footprint in India is simplified with structured corporate assistance. Reach out to the regulatory specialists at SetIndiaBiz to structure your Indian presence and navigate regulatory filings.

In This Article

    Author Bio

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    Editorial Team

    Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.

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