CG Power and Industrial Solutions (CG) applied for India's incentive scheme for semiconductor manufacturing, a fresh move by India-based manufacturers to venture into the OSAT field.
According to filings to Indian exchanges on November 22, CG, a subsidiary of Murugappa Group, said it applied with the Ministry of Electronics and Information Technology, seeking approval to set up an OSAT facility, with an estimated investment on the project over five years of US$791 million, which can be funded by a combination of subsidy, joint venture partner equity contribution, and debt. The company said it is discussing with technology providers and anchor customers.
Kranthi Bathini, a strategist at WealthMills Securities, told Bloomberg that the Murugappa Group could enter this intricate industry, demanding technological partnerships with international entities. However, this venture requires substantial capital investment and a more extended return period.
Founded in 1937, CG provides transformers, switchgear, circuit breakers, network protection and control gear, motors, drives, power automation products, and turnkey solutions in industrial, electrical, and railway applications.
According to Businessline, Murugappa Group had resisted venturing into new areas until the younger generation took the helm and forayed into e-mobility, phase-changing chemicals, drones, cameras for handsets, and online payment gateway services in recent years.
According to the India Electronics & Semiconductor Association and Counterpoint, the Indian semiconductor market is expected to grow from US$22.7 billion in 2019 to US$64.1 billion by 2026. Meanwhile, the OSAT business is viewed as the most feasible way for India to begin nurturing the semiconductor ecosystem.
