Tata Semiconductor has raised $735 million to fund its Dholera fab project, which marks a significant step in India’s efforts to build a semiconductor manufacturing ecosystem. It is also aimed at reducing global chip imports. The initiative is aligned with the Union Budget 2026-27, which focused on India’s technology ambitions with India Semiconductor Mission 2.0.
Tata Semiconductor Manufacturing Pvt Ltd (TSML), a subsidiary of Tata Electronics, has secured Rs. 168.35 billion (approximately $735 million) in loans from five foreign banks to finance its planned Rs. 910 billion semiconductor fabrication facility in Dholera, Gujarat.
The financing was arranged through the banks’ branches in Gandhinagar’s GIFT City, which allows access to lower interest rates. HSBC, MUFG, First Abu Dhabi Bank, DBS, and ANZ collectively provided the funds. The project, valued at Rs. 1.91 trillion, is part of India’s broader push to establish a domestic chip-making industry.
Tata secures $735 million with strict lender conditions, pledging land valued at zero while retaining brand control and majority stake. According to filings with the Ministry of Corporate Affairs, the lenders have imposed conditions requiring the Tata Group to retain a majority 51% stake in TSML and continue using the Tata brand name. The loan, repayable by 2031, also stipulates that the company should maintain equity of at least Rs. 1.3 billion for every Rs. 1.7 billion borrowed.
Tata Electronics has already invested around Rs. 36.9 billion in TSML since its establishment in November 2023. The company, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp., aims to begin trial production by mid-2027, with an initial capacity of 50,000 chips per month.
While construction is progressing, experts caution that the facility’s success will depend on overcoming technical challenges during trial production, particularly in ensuring semiconductor purity.
ISM 2.0 will focus on producing semiconductor equipment and materials in India. A provision of Rs. 1,000 crore has been made for ISM 2.0 for FY 2026–27, with a strong emphasis on industry-led research and training centres to drive technology development and create a future-ready skilled workforce.