Amid India’s semiconductor ambitions, Tata secures $735 million with strict lender conditions, pledging land valued at zero while retaining brand control and majority stake.
Tata Semiconductor Manufacturing Pvt Ltd (TSML), a subsidiary of Tata Electronics, has secured ₹168.35 billion (approximately $735 million) in loans from five foreign banks to finance its planned ₹910 billion semiconductor fabrication facility in Dholera, Gujarat.
The project, valued at ₹1.91 trillion, is part of India’s broader push to establish a domestic chip-making industry.
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 must maintain equity of at least ₹1.3 billion for every ₹1.7 billion borrowed.
The Gujarat government has leased 163.5 acres (equivalent to 66.16 hectares) of land to Tata Electronics for the project, but according to an exclusive report by Mint, the land has been valued at zero in official filings, reflecting its undeveloped status.
Despite this, the land has been pledged as collateral to the banks. Executives familiar with the deal noted that the lenders’ confidence rests primarily on Tata’s global credit profile rather than land valuation.
The financing was arranged through the banks’ branches in Gandhinagar’s GIFT City, enabling access to lower interest rates. HSBC, MUFG, First Abu Dhabi Bank, DBS, and ANZ collectively provided the funds.
Industry analysts described the loan terms as unconventional but highlighted the strong reliance on Tata’s reputation and government support.
Tata Electronics has already invested around ₹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.
