Paras Semiconductors, a wholly owned subsidiary of Paras Defence and Space Technologies Ltd (PDST), has signed a Memorandum of Understanding with the Madhya Pradesh State Electronics Development Corporation (MPSeDC) to build a greenfield OSAT (Outsourced Semiconductor Assembly and Test) facility in the Indore-Ujjain region. The project will involve an investment of ₹6,200 crore and is expected to significantly strengthen India’s semiconductor packaging capabilities at a time when the country is making a concerted push to build a self-reliant chip ecosystem.
What Is an OSAT Facility?
An OSAT (Outsourced Semiconductor Assembly and Test) facility performs the back-end manufacturing processes that turn raw silicon wafers into finished semiconductor chips. Semiconductor manufacturing is broadly divided into two stages: front-end fabrication, where circuits are etched onto silicon wafers at a foundry, and back-end assembly and testing, where the wafer is cut into individual dies, packaged into protective casings, and tested for reliability.
OSAT companies carry out these back-end functions on a contract basis for fabless chip companies and integrated device manufacturers. The services include wafer dicing, die bonding, wire bonding, molding, flip-chip assembly, wafer bumping, and final testing. Without OSAT facilities, even the most advanced chip designs cannot be turned into usable products.
The proposed facility in Madhya Pradesh will operate at an advanced level, offering 3D heterogeneous integration, 2.5D/3D advanced packaging, hybrid bonding, ultra-high-density fan-out packaging, chiplet integration, and wafer bumping. These are among the most sophisticated packaging technologies available globally, used in high-performance computing, AI accelerators, and defence electronics.
About Paras Defence and Space Technologies
Paras Defence and Space Technologies Ltd (PDST) is an Indian private sector defence engineering company with over four decades of experience. It operates across four key business segments: Defence and Space Optics, Defence Electronics, Heavy Engineering, and Electromagnetic Pulse (EMP) Protection Solutions. The company designs, develops, manufactures, and tests high-precision products for India’s defence and space sectors.
The foray into semiconductors through its subsidiary, Paras Semiconductors Pvt Ltd, marks a strategic diversification for the company. The new OSAT facility will leverage Paras’s existing expertise in optics and optronics to develop semiconductor devices for sensor technologies, optical systems, and other strategic defence applications. This makes the facility especially relevant for India’s push toward indigenisation of defence electronics.
The Ujjain-Indore Corridor and Madhya Pradesh’s Semiconductor Ambitions
The facility will be set up on a 50-acre site along the Ujjain-Indore Corridor, which the state government is developing as a dedicated technology and advanced manufacturing hub. The location offers proximity to Indore’s existing industrial infrastructure, skilled workforce availability, and connectivity to major transport routes.
The project aligns with the Madhya Pradesh Semiconductor Policy 2025, which offers capital subsidies, interest subsidies, land rebates, and power tariff support to attract semiconductor and electronics manufacturing investments. The policy positions MP among the few Indian states with a dedicated semiconductor incentive framework.
Madhya Pradesh has been actively building its semiconductor ecosystem in recent months. In July 2026, Spain-based Submer Group announced a $2 billion (approx ₹19,000 crore) investment in MP’s semiconductor and data centre ecosystem, a project expected to create nearly 5,000 direct jobs. Both announcements came at or around the MP Tech Growth Conclave 3.0, which focused on Global Capability Centres, data centres, and semiconductors.
These investments signal that Madhya Pradesh is emerging as a serious contender in India’s semiconductor landscape, traditionally dominated by Gujarat, Karnataka, Tamil Nadu, and Telangana.
India’s Semiconductor Mission 2.0 and the OSAT Push
The Paras OSAT facility comes at a pivotal moment for India’s semiconductor ambitions. In July 2026, the Union Cabinet approved the second phase of the India Semiconductor Mission (ISM 2.0), also called the Semicon India Programme (Semicon 2.0), with an unprecedented fiscal outlay of ₹1,27,500 crore. This six-year programme aims to accelerate the development of a comprehensive semiconductor ecosystem in India.
Semicon 2.0 is built on six strategic pillars:
| Pillar | Focus Area |
|---|---|
| Design | Deepening the chip design ecosystem, supporting startups and MSMEs with seed capital and EDA tools |
| Machines and Materials | Incentivising manufacturing and R&D of semiconductor equipment, chemicals, and gases |
| Setting Up More Fabs | Attracting new silicon, compound semiconductor, and display fabrication units |
| Strengthening ATMP/OSAT | Encouraging advanced packaging capacity with financial support of up to 35% of capital expenditure |
| Research and Development | Developing advanced process nodes in collaboration with domestic and international R&D centres |
| Talent Development | Expanding chip design training from 320 universities and deepening clean room and fab construction skilling |
Under the scheme, advanced packaging facilities like the proposed Paras OSAT unit are eligible for 35% fiscal support on capital expenditure on a pari-passu basis. Conventional packaging units can receive 25% support. This makes the OSAT segment one of the most incentivised areas under the new mission.
The government has already approved 12 semiconductor manufacturing projects in the first phase of ISM, with an investment pipeline of around ₹1,51,400 crore. The first domestic silicon fab is scheduled to be commissioned in 2028.
Strategic Significance
The Paras OSAT project holds importance across multiple dimensions.
For India’s semiconductor ecosystem: The facility adds advanced packaging capacity at a time when global supply chains are diversifying away from traditional hubs like Taiwan and China. Advanced packaging has become a critical bottleneck in chip manufacturing, and India’s ability to offer cutting-edge OSAT services strengthens its position in the global semiconductor value chain.
For defence indigenisation: Semiconductor chips are vital for modern defence systems, including radar, electronic warfare, guided missiles, and secure communications. Paras Defence’s background in defence engineering means the facility will likely cater to strategic applications aligned with the government’s Aatmanirbhar Bharat (Self-Reliant India) push in defence manufacturing.
For Madhya Pradesh: The project is expected to create significant employment for highly skilled professionals, encourage ancillary industries, and strengthen local MSME supplier networks. It reinforces the state’s position as an emerging destination for high-technology manufacturing.
For the ecosystem: OSAT facilities have a multiplier effect on the local economy. They attract suppliers of specialty chemicals, industrial gases, precision tools, and testing equipment, creating a broader industrial cluster around the facility.
Key Takeaways
- Paras Semiconductors, a subsidiary of Paras Defence and Space Technologies, signed an MoU with MPSeDC to set up a greenfield OSAT facility in the Indore-Ujjain region of Madhya Pradesh.
- The project involves an investment of ₹6,200 crore and will be located on a 50-acre site along the Ujjain-Indore Corridor.
- The facility will offer advanced packaging technologies including 3D heterogeneous integration, 2.5D/3D packaging, hybrid bonding, chiplet integration, and wafer bumping.
- The project aligns with the Madhya Pradesh Semiconductor Policy 2025 and the Union Cabinet-approved Semicon 2.0 programme, under which advanced OSAT units receive 35% fiscal support on capital expenditure.
- The India Semiconductor Mission 2.0 was approved in July 2026 with a fiscal outlay of ₹1,27,500 crore to build a comprehensive semiconductor ecosystem over six years.
