The Union Cabinet, presided over by Prime Minister Narendra Modi, on Monday approved a proposal of Kaynes Semicon Pvt Ltd to set up a major semiconductor unit in Sanand, Gujarat, which will help meet India’s growing demand for chips required by many industries.

Briefing newspersons after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said in the first 85 days of its term, the government has already approved infrastructure projects worth Rs 2.50 lakh crore.

In the semiconductor sector, four projects have been already approved. They are making good progress, he said, and the first project is expected to turn out Made in India chips by the middle of next year. Semiconductors are a base industry like the steel industry which helps the growth of other industries, Mr Vaishnaw said.

The semiconductors are used in the auto, mobile, electronic, and home appliances industries. Everything that switches on or off requires a semiconductor, he said. India wanted the chips industry to develop from 1962, he said.

After the first four projects, the project approved on Monday for Sanand is a major one. The proposed unit will be set up with an investment of Rs 3,300 crore with a manufacturing capacity of 63 lakh chips a day. It will come up on a 46-acre plant and all its production is already booked for use.

The chips produced in this unit will cater to a wide variety of applications which include segments such as train-sets, industries, automotive, electric vehicles, consumer electronics, telecom, mobile phones, and home appliances.

The minister said a complete ecosystem for the semiconductor industry is emerging in the country. All components required in the industry like gases, equipment, and chemicals are coming to India. India has a big capacity for designing chips including highly advanced chips, Mr Vaishnaw said. Thirteen companies are designing chips after government incentives.

He said the first four projects will bring an investment of almost Rs 1.5 Lakh crore. The cumulative capacity of these units is about seven crore chips per day.

The Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India was notified on 21 December 2021 with a total outlay of Rs 76,000 crore.

In June 2023, the Union Cabinet approved the first proposal for setting up a semiconductor unit in Sanand, Gujarat.

In February 2024, three more semiconductor units were approved. Tata Electronics is setting up a semiconductor fab in Dholera, Gujarat, and one semiconductor unit in Morigaon, Assam. CG Power is setting up one semiconductor unit in Sanand, Gujarat.