PLI Semiconductor Modified Scheme Fab Capex Milestone Reconciliation

A silicon fab anchor beneficiary running the Modified Scheme fab sub-scheme — at the operating scale of the Tata Electronics fab at Dholera Gujarat in joint venture with Powerchip Semiconductor Manufacturing Corporation of Taiwan, sanctioned in February 2024 for 28nm to 90nm CMOS process nodes with a project cost of approximately Rs 91,000 crore and a corresponding 50 percent fiscal-support ceiling of approximately Rs 45,500 crore — runs a multi-year capex-linked milestone disbursement cycle against the ISM approval letter’s schedule. This is PLI Semiconductor Modified Scheme fab capex milestone reconciliation at operating scale for a first-Indian-silicon-foundry beneficiary, and the discipline that keeps the capex ledger, the ICEGATE Bill of Entry register, the per-CMOS-node qualification test log with the technology-partner certification letter, the employment milestone tracker, and the Ind AS 16 tangible-asset and Ind AS 20 conditional-grant entries simultaneously clean is what separates a beneficiary whose milestone tranches land on schedule from one that spends the following financial year litigating an under-documented capex line or a deferred technology-partner qualification certificate at the ISM.

The reconciliation in one paragraph

A fab anchor beneficiary runs a five-surface reconciliation cascade across the multi-year construction and commissioning cycle. Surface one is the capex ledger by ISM asset category — civil and structural works, clean-room utilities (HVAC, ultra-pure water, chemical delivery, gas distribution, vacuum systems), process equipment by tool type (steppers, ion implanters, chemical vapour deposition tools, physical vapour deposition tools, plasma etchers, chemical mechanical planarisation tools, wafer inspection tools), metrology, IT and control infrastructure, environmental abatement — reconciled against the ISM-sanctioned project cost and the approval letter’s per-milestone disbursement schedule. Surface two is the ICEGATE Bill of Entry register for imported capital equipment (ASML lithography steppers for the mature-node lithography line, Applied Materials ion implanters and deposition tools, Lam Research plasma etchers, equivalent CMP and wafer inspection tools — this is a mature-node not EUV equipment mix) carrying the invoiced value net of any Basic Customs Duty exemption benefit, with end-use bond execution and periodic end-use certification linkage. Surface three is the per-CMOS-node qualification test log — pilot lot run data, wafer yield percentage per node, defect density per die area, and the MeitY-approved technology-partner certification letter (for the Tata Dholera fab JV, PSMC of Taiwan certifies each qualified CMOS node’s process readiness through pilot lot run and yield data). Surface four is the employment milestone tracker — direct headcount build-up against the sanctioned commitment (typically 1,000 to 5,000 direct jobs per anchor beneficiary depending on scale), provident fund establishment code linkage, ESIC registration, and payroll register extracts. Surface five is the accounting and tax overlay — Ind AS 16 tangible-asset capitalisation for the certified capex, Ind AS 20 conditional-grant recognition per ISM milestone certification event with presentation choice between deferred income and deduction from asset carrying amount, Section 115JB MAT book-profit adjustment on the recognition-basis tranche, Section 115BAA regime re-evaluation per milestone, Section 194Q code 1031 buyer-side TDS on domestic vendor capex procurement above Rs 50 lakh per supplier per FY, and Section 195 or applicable Double Tax Avoidance Agreement rate on cross-border technology-licence-fee and royalty payments to the foreign technology partner. The umbrella Rs 76,000 crore ISM claim reconciliation across all four sub-schemes (fab, display fab, compound semi and silicon photonics and discrete, and ATMP-OSAT) is walked in PLI Semiconductor Rs 76,000 crore ISM MeitY claim reconciliation India; this article zooms into the fab sub-scheme surface.

What the scenario looks like in India — the illustrative persona

The Modified Scheme fab sub-scheme has, as of the current published record, one approved anchor beneficiary: Tata Electronics Private Limited’s silicon fab at Dholera Gujarat in joint venture with Powerchip Semiconductor Manufacturing Corporation (PSMC) of Taiwan, sanctioned by the Union Cabinet in February 2024 for 28nm to 90nm CMOS process nodes at a project cost of approximately Rs 91,000 crore with a corresponding fiscal-support ceiling of approximately Rs 45,500 crore at the 50 percent sub-scheme rate. This is the first Indian silicon foundry and the anchor illustration for the fab reconciliation surface. The equipment mix is a mature-node lithography stack (ASML steppers for the 28nm and coarser nodes, not the leading-edge EUV lithography used at sub-10nm foundries), Applied Materials and Lam Research ion implanters and deposition and etch tools, and equivalent CMP and wafer inspection tools — the same equipment class that a Taiwanese or Korean mature-node foundry deploys, transferred into a greenfield Indian clean-room build via the PSMC technology-partner arrangement.

For the illustrative worked example in this article, we take a first-fab tranche of a hypothetical anchor at illustrative Rs 46,000 crore total 5-year capex with a Rs 23,000 crore 50 percent fiscal-support ceiling — this is a smaller-scale illustration for readability, not a claim about the exact sanctioned Tata Dholera position (the Rs 91,000 crore Tata figure is a public record; the per-milestone tranche schedule inside the ISM approval letter is confidential). The point of the illustrative persona is the reconciliation surface across a multi-year capex-linked milestone waterfall, not any specific anchor beneficiary’s exact ISM position. Where the JV vehicle is a distinct legal entity from the domestic group parent (as with the Tata Electronics fab JV with PSMC), the intra-group technology-licence-fee, royalty, and management-service-fee flows attract Section 92BA specified-domestic-transaction treatment and Rule 10D documentation on the domestic leg, and Section 195 or applicable Double Tax Avoidance Agreement withholding on the cross-border leg to PSMC. The PLI scheme selector for electronics manufacturers in India walks the multi-scheme decision that sits upstream of the ISM participation choice, particularly for groups with concurrent exposure across the MeitY PLI LSEM, PLI IT Hardware, and Modified Scheme fab and ATMP-OSAT sub-schemes.

The regulatory overlay — Modified Scheme fab sub-scheme, capex-linked disbursement, technology-partner qualification, Ind AS 16 and Ind AS 20

Four regulatory anchors govern the fab sub-scheme claim and disbursement chain, and each maps to a specific reconciliation surface.

The Modified Scheme for Setting up of Semiconductor Fabs was notified by MeitY in September 2022 as one of four sub-schemes under the Rs 76,000 crore umbrella outlay. The fab sub-scheme funds 50 percent of the sanctioned project cost for silicon foundries producing logic, memory, or mixed-signal integrated circuits at qualified technology nodes. The disbursement mechanism is capex-linked (not incremental-sales-linked as in the MeitY PLI LSEM, PLI IT Hardware, and DPIIT PLI White Goods schemes) — the anchor beneficiary earns disbursement against certified capital expenditure incurred at each milestone, technology-partner process-node qualification proof, and employment milestone achievement, not against year-over-year sales growth above a base year. The India Semiconductor Mission (ISM), established under MeitY, is the nodal agency for application evaluation, milestone certification, and disbursement approval.

The capex-linked milestone disbursement waterfall is the second regulatory anchor. A typical fab milestone framework — subject to the exact per-milestone schedule inside each anchor beneficiary’s confidential ISM approval letter — runs Year 1 land acquisition, civil works, tool-shell erection and partial equipment procurement (approximately 30 percent of total capex); Years 2 to 3 full tool-out and process qualification (approximately 50 percent of total capex); Years 4 to 5 pilot production and commercial ramp (approximately 20 percent of total capex). Each milestone tranche is triggered by three parallel certifications: capex-incurred certification (chartered engineer certification of civil and structural works, statutory auditor cost certification per a Form 3CD-style template for capitalised plant and equipment, ICEGATE Bill of Entry evidence for imported capital equipment with the invoiced value net of any Basic Customs Duty exemption benefit); technology-partner process-node qualification certification (pilot lot run data and wafer yield percentage per qualified CMOS node certified by the MeitY-approved technology partner — PSMC for the Tata Dholera fab JV); and employment milestone certification (direct headcount build-up against the commitment evidenced by provident fund establishment codes, ESIC registrations, and payroll register extracts).

The technology-node qualification is the third regulatory anchor and is unique to the semiconductor scheme. Unlike the DVA-based mechanic in the sister MeitY and DPIIT PLI schemes, the Modified Scheme fab sub-scheme does not use a domestic value addition percentage as the eligibility gate — the anchor beneficiary must instead prove that the sanctioned process technology is producing dies at acceptable yield percentage per the MeitY-approved technology partner. For a 28nm to 90nm CMOS mature-node logic fab (the Dholera fab persona), the qualification bundle for each milestone comprises: pilot lot run identifiers and wafer count per node, wafer or lot yield percentage per node, defect density per die area, in-line electrical test data and process control monitor data, and a process qualification letter from the foreign process-technology licensor. The reconciliation surface is a per-node qualification test log bound one-to-one with the milestone tranche request submitted to the ISM portal.

Ind AS 16 (Property, Plant and Equipment) and Ind AS 20 (Accounting for Government Grants and Disclosure of Government Assistance) together form the fourth regulatory anchor. Ind AS 16 governs the tangible-asset capitalisation for civil, clean-room build, and process equipment — the invoiced cost of each tool (inclusive of freight, insurance, installation and commissioning charges, net of any Basic Customs Duty exemption benefit) is capitalised as tangible plant and equipment with useful-life estimates typically 10 to 20 years for fab tools subject to obsolescence review at each reporting period. Ind AS 20 governs the recognition of the fiscal-support tranche as a conditional grant related to assets — recognition aligns with each ISM milestone certification event once the beneficiary has reasonable assurance that the milestone bundle will be accepted and the tranche received. The presentation election is between recognising the tranche as deferred income (amortised into P&L over the useful life of the related fab tools) or deducting the tranche from the Ind AS 16 carrying amount of the related plant and equipment (reducing the depreciation charge over the useful life). Section 115JB MAT at 15 percent (plus surcharge and cess) applies on the recognition-basis book profit; the amortisation of deferred income or the reduced depreciation charge flows into the MAT book-profit computation each period. An anchor beneficiary that has opted into the Section 115BAA concessional 22 percent regime is exempt from MAT but forfeits several other incentives, and the 115BAA election must be re-evaluated at each milestone as the multi-year grant recognition trajectory clarifies.

A worked example — a fab anchor beneficiary across the multi-year capex milestone cycle

Illustrative — the following figures represent the operating pattern of a Modified Scheme fab sub-scheme anchor beneficiary at an illustrative Rs 46,000 crore total 5-year capex with a corresponding 50 percent fiscal-support ceiling of Rs 23,000 crore. This is a smaller-scale illustration for readability. The actual Tata Electronics Dholera fab sanctioned project cost is approximately Rs 91,000 crore per public record with a corresponding 50 percent fiscal-support ceiling of approximately Rs 45,500 crore. Per-milestone tranche schedule, per-milestone capex percentage, technology-partner qualification cadence, and employment ramp curve inside each approval letter are governed by the confidential approval order between the beneficiary and the ISM; the numbers below are illustrative of the reconciliation surface, not a claim about any specific real anchor beneficiary’s exact ISM position. Each tranche is subject to the beneficiary’s approval-letter sanctioned ceiling; the illustrative computation below shows the reconciliation grammar before ceiling binding.

Consider a fab anchor beneficiary at the illustrative Rs 46,000 crore total 5-year capex profile with the following milestone waterfall:

The M1 milestone bundle (FY 2024-25) evidences Rs 12,000 crore certified capex on land acquisition, civil and structural works, first-fab tool-shell erection, and partial fab equipment procurement — ASML lithography steppers for the mature-node lithography line, Applied Materials ion implanters and deposition tools, Lam Research plasma etchers, equivalent CMP and wafer inspection tools. The certification evidence bundle comprises the chartered engineer certification for civil works, the statutory auditor Form 3CD-style cost certification for capitalised plant and equipment, the ICEGATE Bill of Entry register with Basic Customs Duty exemption tracking against end-use bond execution, the PSMC pilot process readiness statement for the initial installation, and the direct-headcount ramp evidenced by the provident fund establishment code linkage. Subject to ISM certification, the M1 tranche at 50 percent of the Rs 12,000 crore certified base — Rs 6,000 crore — is authorised for disbursement against the approval letter’s schedule.

The M2 milestone bundle (FY 2025-26) at Rs 20,000 crore certified capex represents the full tool-out and initial process equipment installation phase — this is typically the largest single-year capex draw in a fab construction cycle. The certification bundle adds equipment installation and commissioning reports per tool line, the PSMC pilot lot run data for the first qualified CMOS node (28nm or 40nm depending on the beneficiary’s node roadmap), and the mid-cycle direct-headcount ramp against the commitment. Subject to ISM certification, the M2 tranche at Rs 10,000 crore is authorised.

The M3 milestone bundle (FY 2026-27) at Rs 8,000 crore certified capex covers full process qualification across all sanctioned nodes and pilot production ramp. The certification bundle adds per-node pilot lot yield data (28nm, 40nm, 65nm, 90nm), defect density per die area, in-line electrical test and process control monitor data, and the PSMC technology-partner qualification letter for each qualified CMOS node. Subject to ISM certification, the M3 tranche at Rs 4,000 crore is authorised. M4 and M5 wind down the capex profile and complete the multi-year commercial ramp.

Under Ind AS 16, the certified capex is capitalised each year against the fixed-asset register with useful-life estimates per tool category. Under Ind AS 20, each milestone-linked fiscal-support tranche is recognised on the ISM certification event with the presentation-policy election — either as deferred income amortised over the useful life of the related fab tools or as a deduction from the Ind AS 16 carrying amount of the related plant and equipment, reducing depreciation over the useful life. Section 115JB MAT flow-through applies on the amortisation of deferred income or the reduced depreciation for the period. Cross-border technology-licence-fee payments to PSMC under the JV arrangement attract Section 195 withholding at the applicable India-Taiwan DTAA rate for royalty and process-know-how, and domestic vendor capex procurement above Rs 50 lakh per supplier per FY attracts Section 194Q code 1031 buyer-side TDS at 0.1 percent. The reconciliation playbook monthly close pillar situates the milestone-linked recognition entries within the entity’s monthly close cadence so that the ISM milestone certification event and the Ind AS 20 recognition entry land in the correct period rather than drifting into the following month’s book close.

Common reconciliation breakages

Five breakages recur in the Modified Scheme fab sub-scheme milestone-linked disbursement cycle.

• Capex ledger asset-category split against the ISM approval letter’s disbursement schedule. The ERP fixed-asset register typically carries capitalised cost by SAP-standard or Oracle-standard asset class (buildings, plant and machinery, IT equipment) rather than the granular ISM asset taxonomy (civil, clean-room utilities, process equipment by tool type, metrology, IT infrastructure, environmental abatement). A misclassified capex line — for example, a process-equipment installation service booked into a services line rather than the process-equipment line — can reduce the tranche’s certified base or delay the tranche pending re-classification. The reconciliation surface is a chartered-engineer-certified mapping table between the ERP asset register rows and the ISM asset-category taxonomy, reviewed at each milestone submission and cross-referenced to the reconciliation failure-mode analysis for India methodology for documented control-test discipline.

• ICEGATE Bill of Entry to Basic Customs Duty exemption tracking gap. Fab beneficiaries typically qualify for BCD concessional rates or exemptions on lithography, ion implantation, deposition, etch, CMP, and inspection tool imports under specific Customs notifications, subject to end-use bond execution and periodic end-use certification. Where the ICEGATE Bill of Entry register is not tightly reconciled to the end-use bond register and the physical equipment-deployed register at the sanctioned fab, an equipment line imported at the exemption but not deployed at the sanctioned capacity can attract retrospective duty demand with interest and can also disqualify the corresponding capex from the fiscal-support base. The reconciliation discipline is a periodic three-way tie-out.

• Per-CMOS-node qualification test log and PSMC (or equivalent) technology-partner certification letter linkage gap. Each qualified process node must be evidenced by pilot lot run data and a MeitY-approved technology-partner certification letter. Where the pilot lot run data is not tightly linked to the technology-partner certification letter and to the specific milestone tranche request submitted to the ISM, the ISM certification review can flag a documentation gap and defer the corresponding tranche. This is the semiconductor-specific gating check that has no direct analogue in the incremental-sales-linked PLI schemes.

• Employment milestone tracker and provident fund establishment code linkage gap. The sanctioned direct-headcount commitment (1,000 to 5,000 direct jobs depending on beneficiary scale) must be evidenced at each milestone by provident fund establishment code linkage per the sanctioned facility, ESIC registration, and payroll register extracts. Where a group HR function centralises payroll across multiple entities, the payroll extract must isolate the sanctioned fab’s headcount (by cost centre, location code, or employee master flag) and the PF establishment code linkage must be per-facility rather than group-level. A mis-tagged extract that inflates or deflates the sanctioned facility’s headcount can either delay a tranche or create an audit-exception exposure on subsequent ISM review.

• Ind AS 20 recognition timing on ISM milestone certification events and Section 115JB MAT under-provisioning. Beneficiaries that recognise the milestone-linked fiscal-support tranche only on cash disbursement (rather than on ISM milestone certification and approval-letter disbursement authorisation) create a book-tax timing gap and can under-provision Section 115JB MAT for the period in which the milestone was certified but cash had not yet arrived. The reconciliation discipline is that the ISM milestone certification and the associated disbursement authorisation trigger the Ind AS 20 grant-receivable recognition, the same period triggers the Section 115JB MAT book-profit adjustment for the presentation-elected amortisation or reduced depreciation, and the cash-receipt event only settles the receivable balance without a fresh income event. The 57 human errors and the detection envelope trust asset situates this specific error class within the broader taxonomy of process failures.

How a reconciliation platform handles this

A purpose-built electronics reconciliation platform ingests the ISM approval letter’s sanctioned project cost, fiscal-support ceiling, and milestone tranche schedule, the beneficiary’s SAP FI or Oracle Fusion fixed-asset register with the ISM asset-category re-classification mapping, the ICEGATE Bill of Entry register for imported capital equipment with Basic Customs Duty exemption tracking and end-use bond linkage, the chartered engineer certification and statutory auditor Form 3CD-style cost certification per milestone, the per-CMOS-node qualification test log with pilot lot run data and PSMC or equivalent MeitY-approved technology-partner certification letter register, the employment milestone tracker with direct headcount build-up and provident fund establishment code linkage, the Section 194Q code 1031 domestic vendor register above Rs 50 lakh per supplier per FY, the Section 195 and DTAA withholding register for cross-border technology-licence-fee and royalty payments, and the Ind AS 16 tangible-asset and Ind AS 20 conditional-grant recognition events per milestone — and produces a milestone-linked fab claim pack that closes the loop from the capex ledger row through the ISM portal milestone reporting to the recognition entries on the beneficiary’s books. Match-rate improvement from 51 to 88 percent across the capex-to-asset-category taxonomy mapping, the ICEGATE end-use bond three-way tie-out, the technology-partner qualification letter linkage, the employment headcount tie-out, the vendor withholding reconciliation, and the milestone-linked recognition — combined with an ISO 27001:2022 posture, AWS Mumbai residency, and DPDP Act 2023 aligned data handling — is what makes the platform an infrastructure investment for a fab anchor beneficiary running a multi-year capex-and-commissioning cycle rather than a spreadsheet substitute. The commercial pillar for the sub-cluster is Electronics reconciliation software India; the broader authority is reconciliation software India.

Terra Insight Editorial Team Reconciliation Infrastructure

Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →

Published 22 July 2026

Domain expertise

TDS Reconciliation GST Input Credit Platform Settlements NACH Batch Matching Bank Reconciliation Form 26AS Matching ERP Integrations Enterprise Finance Ops

Reviewed by

NK

Navin Krishnan

Managing Director & Founder — Terra Insight

Ex Amazon India · Intuit QuickBooks · Tata nexarc

ISO 27001:2022 Patent Pending Incorporated 2024