Govt bars selling chip plants till declaration of full commercial production under Semicon 2.0 scheme

Approved chip plants under the Semicon 2.0 programme will not be allowed to sell or mortgage any part of the project till the declaration of commercial production of the entire project, according to the scheme's guidelines issued on Thursday.

The government had notified Semicon 2.0 with an incentive outlay of Rs 1.27 lakh crore.

Till declaration of the commercial production of the entire project, the company shall not sell or dispose of the project assets or any part thereof or create thereon any mortgage, lien or charge by way of hypothecation or otherwise, except in the ordinary course of business, without prior approval of the Nodal Agency, the guideline said.


The scheme has six pillars to boost the semiconductor ecosystem in the country comprising - design, machines and materials, setting up more fabs, further strengthening the ATMP and OSAT industry, research and development and talent development.

Out of the six pillars, guidelines have been published for three pillars - machines and materials, setting up more fabs, further strengthening the ATMP and OSAT industry.

Applicants under the machines and materials pillar can also receive production-linked incentives (PLI) benefits under the scheme for domestic sourcing of components and sub-assemblies that are produced in India.

As per the guidelines, units receiving fiscal support under the scheme shall have to remain in commercial production for a period of at least (three) years from the date of commencement of commercial production of the entire project and provide an undertaking to the same.

Expenditure incurred on land and its development, temporary structures, site offices, temporary office space, and other temporary facilities created at the project site will not be considered as eligible capital expenditure or investment under the scheme.

As per the norms, cost incurred for technology transfer, interest during construction (IDC), and research and development will not be considered as part of capital expenditure or investment under Semicon 2.0.

Applicant and promoter or group applying for the incentive under the scheme should hold at least 51 per cent of the total equity share capital with equivalent voting rights in the project company at all times during the term of the fiscal support agreement (FSA), including its three years of operation after the commercial operation date.

The controlling entity must be identified at the application stage itself, and its continuity is a condition for continued fiscal support and fulfilment of other conditions as per the FSA. Any change in shareholding must be reported to the Nodal Agency during this period, the guidelines said.