Semiconductor unit cleared, TN firm donated Rs 125 crore to BJP

“They could do scams worth thousands of crores, but they could not invest thousands of crores into semiconductor manufacturing.” This was Prime Minister Narendra Modi’s barb at the Congress party on March 13, 2024. Modi was speaking virtually at the foundation stone laying ceremony of semiconductor units in Assam. With the general elections barely a month away, Modi did not miss an opportunity to criticise the Congress for purportedly failing to set up a domestic semiconductor industry when it was in power. “This is why our government works with a forward-looking thought and futuristic approach,” Modi added.

On February 29, 2024, the Union Cabinet led by the prime minister had greenlit three semiconductor units in Gujarat and Assam. One of them would be built by the Tamil Nadu-based Murugappa group, a traditional player in finance, bicycle and agriculture sectors, which had no previous presence in the semiconductor industry.

The unit, with an investment of Rs 7,600 crore, was to come up in Sanand, Gujarat. As part of a scheme to incentivise semiconductor production, the Centre underwrote Rs 3,501 crore of this amount.

Within a month of the Union Cabinet’s approval, the Murugappa group donated an unprecedented Rs 125 crore to the Bharatiya Janata Party. This was done through its Triumph electoral trust, which had never donated at this scale before.

A Murugappa group spokesperson declined to comment on the timing of the donation.

The Rs 125-crore donation made the Murugappa group the BJP’s third-biggest donor in the year leading to the 2024 general elections, behind Megha Engineering and Infrastructures Limited and Bharti Airtel.

MEIL and Airtel had donated their sums to the BJP through anonymous electoral bonds, which were struck down as unconstitutional by the Supreme Court on February 15, 2024.

Semiconductor push

The Murugappa group’s semiconductor unit in Sanand was part of a broader push by the Modi government in 2021 to create a domestic semiconductor industry.

The Covid-19 pandemic had disrupted semiconductor supply chains across the world, causing production delays, like in India’s automobile sector, which relies heavily on semiconductor imports from China and Taiwan.

In 2021 and 2022, the Centre announced a host of schemes under the “India Semiconductor Mission” to encourage companies to set up semiconductor units. These included thousands of crores of subsidies to Indian corporations that would wade into this key sector.

For instance, the scheme to facilitate the assembly, testing and packaging of semiconductor chips offered 50% central subsidy on capital expenditure to set up a unit, with additional financial support from state governments.

In November 2023, CG Power and Industrial Solutions Limited, a Murugappa group company, announced that it had filed an application with the Ministry of Electronics and Information Technology to seek approval to establish a unit under the scheme.

CG Power, once known as Compton Greaves Limited, is an electrical engineering firm founded in 1937. It was owned by the Gautam Thapar-led Avantha group, but years of poor financial performance and a Rs 2,435-crore bank fraud pushed Thapar out of the firm.

The fraud came to light in August 2019, after an internal investigation found that some of the firm’s assets were provided as collateral to several banks for loans. These funds were then siphoned off by a few employees without authorisation.

In November 2020, the Murugappa group bought a majority stake in CG Power through its firm, Tube Investments of India Limited.

But that did not put a lid on the fraud. In June 2021, the Central Bureau of Investigation filed an FIR against CG Power for cheating, criminal conspiracy, breach of trust under the Indian Penal Code and the Prevention of Corruption Act. The firm is the first accused in the case, along with former promoter Thapar and other key personnel.

The CBI filed a chargesheet in the matter in January 2023 – ten months before CG Power applied to set up a semiconductor unit with the Modi government.

Murugappa meets semiconductors

The Murugappa Group had no direct experience in semiconductor manufacturing or packaging. Its biggest firm is the Cholamandalam Investment and Finance Company Limited, a Chennai-based non-banking financial firm founded in 1978.

It has other subsidiaries that manufacture bicycles, sugar, fertilisers and industrial machinery.

However, its newest firm, CG Power, moved rapidly into the semiconductor space in 2023.

On February 8, 2024, months after it applied for a semiconductor unit, the firm roped in two international semiconductor companies into a joint venture agreement – Japan’s Renesas Electronics Corporation and Thailand’s Stars Microelectronics.

The press release made it clear that the venture was subject to government approvals and “subsidy from central and state governments”.

That came three weeks later. On February 29, 2024, the Union Cabinet chaired by Prime Minister Modi approved the joint venture’s semiconductor unit to be built in Sanand in Gujarat, a state governed by the BJP. It claimed that the unit would need an investment of Rs 7,600 crore and create 20,000 “advanced technology jobs” and 60,000 indirect jobs.

Two other ventures in Gujarat and Assam, both headed by the Tata group, which would need Rs 1.18 lakh crore to set up, were also greenlit by the Cabinet.

On March 1, the Murugappa group said that it would have a 92.3% stake in the joint venture, with Renesas owning approximately 6.8% and Stars Microelectronics 0.9%.

“CG’s entry into the semiconductor manufacturing marks a strategic diversification for us,” said S Vellayan, the chairman at CG Power, in a statement. “Our partners, Renesas and Stars Microelectronics, will make our learning curves steeper and help us focus on innovation and excellence.”

Donation to BJP

Within a month of the Union Cabinet’s approval of its semiconductor unit in Sanand, the Murugappa group donated Rs 125 crore to the BJP.

These transactions took place through the Triumph electoral trust, in which a Murugappa group firm owns 99.9% stake, according to a disclosure in June 2023.

The first batch of donations came at the same time as Modi was involved in events associated with the Murugappa group.

On March 11, Modi handed over 1,000 drones to women farmers as part of the Namo Drone Didi scheme.

On the same day, three things happened. The Murugappa group announced that one of its firms, Coromandel International Limited, had supplied 200 of the 1,000 drones – a detail missed in the press release by the Prime Minister’s Offce.

Second, Coromandel International transferred Rs 25 crore to the Triumph trust. And finally, the trust cut a Rs 25-crore cheque to the BJP.

These details were disclosed in Triumph’s latest contribution disclosure to the Election Commission of India. It shows that the group had also donated Rs 2.5 crore to the BJP months before – Rs 2 crore in April 2023 and Rs 50 lakh in June 2023.

On March 13, Modi and Vellayan spoke together at the ceremony to lay the foundation stone of the semiconductor units, where Modi castigated the previous Congress governments for corruption.

More money poured in days later. On March 22, three Murugappa group firms – Tube Investments of India, Cholamandalam Investment and Finance, and CG Power – collectively donated Rs 105 crore to Triumph.

Once again, on the same day, the trust cut a Rs 100-crore cheque to the BJP and a Rs 5-crore cheque to the Dravida Munnetra Kazhagam, the governing party in Tamil Nadu.

In September 2024, the Indian Express reported that CG Power’s semiconductor unit would receive a central government subsidy of Rs 3,501 crore under the scheme to facilitate the assembly, testing and packaging of chips.

On January 17, 2025, the group and the government’s “India Semiconductor Mission” signed an agreement to the effect.

Triumph’s unprecedented donation

Since its establishment, the Triumph electoral trust had rarely made significant donations to any political party.

In fact, its donations usually hovered at much lower levels, sometimes falling to zero, like in 2015-’16 and 2020-’21.

Scroll went through all its disclosures over a ten-year period and found that between April 1, 2014, and February 29, 2024 (the day it received government approval for the semiconductor unit), the Murugappa group had donated Rs 21 crore to the BJP.

But within weeks of the approval, it had donated another Rs 125 crore to the ruling party.

Before March 2024, the group’s highest donation was in 2019-’20 – Rs 10 crore to the BJP.

Weeks after the conglomerate and the government signed the subsidy agreement, a Delhi court criticised the CBI for going slow in its case against CG Power.

On February 10, 2025, the court pulled up the investigative agency for not producing a crime file in the multi-billion bank fraud case against CG Power and its former promoters.

Special Judge Sanjeev Aggarwal of the Rouse Avenue Court said that the agency was not producing a file “without which, the court will be handicapped and will not be in a position to form an opinion, whether further investigations should be done/ordered in this case or not and as to what important aspects may have been missed by the investigating agency”.

The judge added that the CBI “has something material to conceal from the court, to which they want to put a veil of secrecy, so that truth should never come out and see the light of the day and remains”.

The Murugappa group is one of several corporations, such as American semiconductor firm Micron Technology and India’s Tata Electronics and Kaynes Technology, that have received substantial subsidies from the Modi government under the “India Semiconductor Mission”.

Neither Micron or Tata figure in donations made to the BJP, either directly, or through electoral trusts and electoral bonds.

Ramesh Kunhikannan, the managing director of Kaynes Technology, donated Rs 12 crore to the BJP in 2023-’24, according to the party’s latest contribution report. In September 2024, his firm, Kaynes Semicon Private Limited, received an approval to set up a semiconductor unit in Sanand, Gujarat.

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