Growth-stage investor Next Orbit Ventures is investing $100 million in a semiconductor fabrication project based in Gujarat, a top executive said.
The investment is being made out of Next Orbit Ventures’s second fund, which is currently raising $750 million. The firm launched its second fund in November to invest mainly in firms that make semiconductor chips, and solar and LED components.
“We are coming as first investors into this fab project to back India’s growing electronics market, which will reach $400 billion by 2020 as per the government of India’s national policy of electronics 2012 estimates, and requires $100 billion of investment for achieving ‘zero import’ target,” said Ajay Jalan, founder and managing partner at Next Orbit Ventures.
Next Orbit’s investment portfolio includes firms such as Web Element, Cityon Systems Inc., Pranav Sports Academy Ltd, Richway International Trade Ltd, Primark and Sanasa Tech. In April this year, it also invested Rs 115 million in e-commerce firm Infibeam.
Jalan did not identify the project in which Next Orbit is making the investment. The announcement will be made by the government in the next few weeks, he said.
“We are seeing interest from long-term institutional and strategic investors from across the globe,” Jalan said.
According to Jalan, there is vast untapped potential in the electronic system design and manufacturing (ESDM) sector, given initiatives such as Digital India and Make in India.
India, at present, imports more than $90 billion worth of electronic products and components. The rupee has depreciated from around Rs44 per dollar in 2007 to about Rs67 now. Nurturing the electronics sector will save foreign exchange for India and create employment opportunities.
The government will also offer economic and tax incentives to semiconductor fabrication units from the MSIPS (Modified Special Incentive Package Scheme) on the lines of more than $161 billion currently committed by Chinese government for developing its semiconductor industry.