Cyril Amarchand Mangaldas Advised CG Power And Industrial Solutions In Availing Fiscal Support From Government Of India For Murugappa Group’s OSAT In Gujarat
Cyril Amarchand Mangaldas Advised CG Power And Industrial Solutions In Availing Fiscal Support From Government Of India For Murugappa Group’s OSAT In Gujarat
Cyril Amarchand Mangaldas (CAM) advised CG Semi Private Limited, a subsidiary of CG Power and Industrial Solutions Ltd. (CG Power), a Murugappa Group company, in negotiating and finalizing the Fiscal Support Agreement (FSA) with the India Semiconductor Mission (ISM), the nodal agency set up by the Ministry of Electronics and Information Technology, Government of India, for setting up a compound semiconductors/silicon photonics (SiPh)/sensors fab/discrete semiconductors fab and semiconductor assembly, testing, marking, and packaging (ATMP)/outsourced semiconductor assembly and test (OSAT) facility in Gujarat with a capacity of 15 million chips/day (Project) in technological collaboration with Renesas Electronics America Inc. and Stars Microelectronics (Thailand) Public Co. Ltd., with a total investment of approximately INR 7,600 crores.
Under the Fiscal Support Agreement, the Government of India has agreed to provide fiscal support of up to INR 3,501 crores for the Project. The financial support from the Government of India is a key component of the Government’s ambitious scheme to develop India into a semiconductor manufacturing hub. CAM’s team helped CG Power in negotiating the FSA with the ISM, including necessary protections for the project company to ensure smooth disbursement of fiscal incentives by the Government of India and negotiating the security/collateral structure.
The FSA executed by the ISM represents a significant evolution of the public-private partnership model in India in the manufacturing sector since the FSA involves disbursement of fiscal incentives linked to the achievement of specified project-related milestones, including achievement of committed production volumes. The fiscal incentives, while being a grant, are contractually structured as a debt until the project milestones are achieved by CG Semi Private Limited.
This agreement marks a significant step in India’s journey to becoming a global hub for semiconductor manufacturing.
The team advising the Company was led by Ramanuj Kumar, Partner (Co-Head - Projects (Energy & Energy Transition)), with support from Shrey Srivastava, Principal Associate.
