New Delhi: In keeping with the government’s policy of becoming self-dependent, two defence public sector units have entered the fray to jointly set up a semiconductor fab plant in India for strategic projects in military and space sectors.

The two PSUs, which are the main producers as well as consumers of electronics for the armed forces, seek to take advantage of the production-linked-incentive (PLI) scheme of the central government. They have tied up with Next Orbit Ventures and propose to set up a plant in Gujarat’s Dholera if the application is accepted by the government.

Sources said the decision to go in for a joint bid was taken as the PSUs would be able to reduce dependency on foreign suppliers for the building blocks of all electronics and would be able to innovate cutting edge products domestically. It would also enable the PSUs to design custom chips domestically for strategic systems like missiles and combat aircraft. Next Orbit Ventures did not comment on the matter citing the application process was still underway.

Sources said the technology partner is Israeli Tower Semiconductor that has recently been acquired by Intel. According to an official, the foreign partner has committed to procuring a large chunk of the fab units output itself.

According to sources, the combined share of the two PSUs is likely to be just below 50% and the proposed plant could manufacture 40,000 wafers every month. A big factor was that ‘Made in India’ chips and electronics are necessary in national interest, given the dependence currently India has on imported products that can be rigged and bugged.