Paras Semiconductors To Invest ₹6,200 Crore In Chip Packaging Plant In Madhya Pradesh

Defence engineering company Paras Defence and Space Technologies said on Wednesday that its semiconductor unit will invest ₹6,200 crore to set up a chip packaging and testing facility in Madhya Pradesh.

Paras Semiconductors, a subsidiary of the company, signed a memorandum of understanding with the state's department of science and technology to jointly set up an outsourced semiconductor assembly and test (OSAT) facility in the Indore-Ujjain region.

An OSAT plant packages, assembles and tests foundry-made silicon wafers, turning them into finished semiconductor chips. The company said the facility will carry out advanced chip packaging operations and test the packaged chips for reliability.

Govt's Bigger Semiconductor Push

The announcement comes days after the Union Cabinet approved the second phase of the India Semiconductor Mission (ISM 2.0) on July 15, with an outlay of ₹1.275 lakh crore, significantly higher than the ₹76,000 crore allocated in the first phase.

The second phase shifts focus from attracting semiconductor fabrication units to strengthening the domestic supply chain. It will offer incentives to companies supplying raw materials such as minerals and gases used in chip manufacturing.

Union IT Minister Ashwini Vaishnaw said the programme will focus on the design, development and production of indigenous chips. "We will be self-reliant in the production of indigenous chips by the end of this programme," he said.

The scheme comes at a time when the world is facing a memory chip shortage, with companies working to expand production capacity. The government expects the programme to draw investment across other chip segments to help meet the growing demand for chips used in artificial intelligence devices.

As part of the plan, the government aims to promote local manufacturing of semiconductor equipment, speciality chemicals, critical raw materials and advanced packaging technologies, while cutting reliance on imported inputs across the electronics manufacturing ecosystem.

On March 31, Prime Minister Narendra Modi had outlined the government's long-term vision for the sector, stressing the need to build a complete semiconductor ecosystem. "Our effort now is to create an ecosystem so that we can forge big partnerships in both domestic and global supply chains," he had said.

Modi said India aims to meet a larger share of its semiconductor demand domestically, as the country's chip market is expected to grow from about $50 billion to over $100 billion by the end of the decade.

Finance Minister Nirmala Sitharaman had announced ISM 2.0 in the Union Budget for FY27, saying the next phase would focus on equipment, materials, full-stack design capabilities and supply chain resilience.