Tata Electronics in talks to raise $2 billion for expansion

Mumbai: Tata Group's semiconductor business is in initial discussions with domestic and international banks to raise up to $2 billion through multiple loan tranches to fund its expansion plans, according to people familiar with the discussions.

The first tranche is likely to be up to $800 million, with initial pricing discussions around SOFR plus 180 basis points. The talks are at an early stage, with the final size, pricing and lender participation yet to be firmed up. The loan could be priced at around 6%, assuming SOFR remains at around 3.9%.

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A Tata spokesperson did not immediately respond to a request for comment.

Tata Electronics, a wholly owned subsidiary of Tata Sons, has signed a definitive agreement with Taiwan-based Powerchip Semiconductor Manufacturing Corporation (PSMC) for its proposed semiconductor fabrication plant in Dholera, Gujarat. The agreement will enable Tata Electronics to bring semiconductor manufacturing technology and expertise to India and cater to global customers, the company said.

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The plant is being developed with a planned capacity of 50,000 wafer starts per month, with PSMC serving as its technology partner, India Ratings said in a report.

The project, estimated to cost ₹91,000 crore, will manufacture 12-inch wafers using technology nodes ranging from 28 nm to 110 nm for applications such as power management chips and microcontrollers. It will be funded through equity, long-term debt and capital subsidies from the central and Gujarat governments under their respective semiconductor incentive schemes, the rating agency said.

Tata Electronics' liquidity is supported by unencumbered cash balances of ₹2,845 crore at the end of FY25, up from ₹1,485 crore a year earlier, timely equity infusions and its ability to raise working capital limits and long-term debt. The company had debt repayment obligations of ₹1,297 crore in FY27 towards term loans and external commercial borrowings as of September 30, 2025, the rating agency said.