Envisioning an alternative manufacturing base to offset the geopolitical tensions and trade disruptions affecting the global semiconductor supply chain is an ambitious yet achievable move, albeit some decades behind. While the bigger challenge of access to technology, expertise and capital, essential for building a strong semiconductor industry, remains, India seeks to leverage its strategic alliance with semiconductor leaders like the USA, Japan, South Korea and Taiwan.
For someone from the Northeast of India, one would have never imagined the region to be part of the Indian Semiconductor Mission. The announcement of Tata electronics Pvt Ltd to build a cutting-edge Semiconductor Assembly and Test Facility at Jagiroad, Morigaon in Assam came as a welcome surprise to many, what with the history of neglect and disregard for the northeast region in the post-independence era. According to the website of Tata Electronics, ‘The facility will be built with an investment outlay of INR 27,000 crore and is expected to generate over 27,000 direct and indirect jobs in the region.
Tata Electronics Pvt Ltd (a wholly owned subsidiary of Tata Sons Pvt Ltd) will build this facility focusing on three key platform technologies – Wire Bond, Flip Chip, and a differentiated offering called Integrated Systems Packaging (ISP), with plans of expanding the roadmap to advanced packaging technologies in the future. These technologies are extremely critical for key applications in India – like automotive (especially electric vehicles), communications, network infrastructure and others.’
Morigaon is roughly the size of Fiji or the US state of Montana. It is also about two hours or slightly more from Tezpur, a city which still remembers the scars of the presence of the Chinese PLA in 1962. The plant in Assam has many firsts to its credit. It is among the first Semiconductor fabrication plant in India under the Indian Semiconductor Mission. And the confidence in its growth comes not just from the support rendered by the Prime Minister of India, but also from the assurance of the Chief Minister of Assam, Himanta Biswa Sarma, that the company will face no difficulty in setting up the industry. There are several factors that backs this assurance.
The Tata group already has an established relationship with the Govt of Assam with the setup of the Cancer Care Foundation in 2018. In 2022, the govt of Assam and the Tata group signed a Memorandum of Agreement for 10 years to upgrade the government Industrial training institutes (ITIs) across Assam into futuristic Centres of Excellence.
The above MoA was a helpful leverage which the Assam Chief Minister rightfully pitched for while negotiating between the Union Government and the Tata group for selecting the location of the plant. This factor has been highlighted by many observers in the sector in India. A personal rapport built on creating the necessary ecosystem has enabled this collaboration to successfully make this plant a reality. Some of the footprints of this strategic attraction are interesting and effective.
Recently, on 3rd August 2024, the Government of Assam signed an MoU with the Tata group to build a 120 Crore rupees 5 star hotel in the Hathikuli tea garden in the Kaziranga area. This is in addition to the Taj Gateway hotel in Jagiroad for which the Assam Cabinet has approved the lease of 6 acres of land – from the now-defunct Hindustan Paper Cooperation Limited to the Indian Hotels Company Limited. The Taj Gateway hotel is aimed to provide accommodation and hospitality to visiting officials and executives at the semiconductor plant. Another argument for why Morigaon is a key strategic location. It is geographically closer to the other chip manufacturing giants in Taiwan, Malaysia, Singapore and Vietnam. Guwahati has an international airport which operates flights to some of these countries already. This is reminiscent of how the Americans built a slew of airfields in Upper Assam to fly their planes over the eastern Himalayas to Kunming to supply rations and ammunition to the Kuomintang against the Japanese Imperial Army. Morigaon also has an abundant water supply and a good enabling environment for green power, a key consideration for the Tata group. With all the investments to create Centres for excellence, the hope is that Assam would have the workforce with the technical knowledge required and provide a stable talent pool and the ecosystem development this project will require.
But it all cascaded with the publication of the Electronics Policy of the Government of Assam on 29th August 2023. It was not just the commitment to ensure the ease of doing Business, or the ready land lease of nearly 175 acres for 60 years to the Tatas- handed over to the Tatas in July 2024. Anybody with little knowledge of the history of development and investments in the northeast will tell you that, unlike Oil, Coal or Tea, this investment is not on extractive industries. It is therefore important to recognise the huge role the Government of Assam has played in securing a plant of this size in Assam. Significantly the incentives framework under the Assam electronics policy is difficult to resist. A capital subsidy of an additional 40 % of the Capex assistance spread over five years, after securing the approval of the Central Government, is massive for a state like Assam demonstrating the seriousness behind the vision. Both the power supply incentive and water supply incentives are geared to ensure the operational readiness of the plant.
Again, of the total investment of 27000 crores, 10225 will come from the Government of India. Both the SGST- reimbursement on a case-to-case basis for a maximum of 15 years, and the payroll assistance- 20% of net wages for the local employees, are great incentives for the Tatas.
The Assam plant is to be an Assembly Testing Marking and Packaging (ATMP) Unit. ATMP units typically receive packaged semiconductor pieces and assemble them on printed circuit boards (PCBs) to form a working system. They also mark each component for traceability and package them for shipping to consumers. These are the later stages of production and help in forming functional components ready to integrate into electronic products. A fully-fledged FAB system would take comparatively longer to implement as it requires substantial investment, technological expertise and time. Hence ATMP units offer a realistic starting point. The oft-repeated investment mantra of making the region an economic hub and land link to southeast Asia is a dream on its way to reality.
The workforce demographics also include priority for local youths. The plant is projected to generate 27000 direct and indirect jobs in the area. 1500 youth, mainly women from Assam have also been recruited to work in the processing of semiconductors. Presently, these women are undertaking training at Tata Facilities in and around Bengaluru.
A plan for a Skill Development Centre was unveiled by Chief Minster H B Sarma in March 2024. This skill development centre will train young people from the Northeast in Electronics, Artificial Intelligence and different aspects of Semiconductors. These skills would help them procure jobs at the plant in Jagiroad.
It will be an uptick for Industry-Academia Collaboration in the Northeast. An MoU was also signed between the Electronics Sector Skills Council of India (ESSCI) with IIT Guhawati and Ropar in May 2024 to teach prospective engineers about the employment possibilities essential to the semiconductor sector. This MoU is to supply skilled and competent labour to the plant and thereby create a vibrant supportive environment for the growth of this industry and its companies in India.
The Ministry of Tribal Affairs also launched a project with IISc to train 2100 NSQF-certified level 6.0, 6.5 training in semiconductor technology to tribal students over three years. Of the 2100, 1500 are in basic training and 600 are in advanced training. This is another avenue through which Tata could recruit skilled personnel for the plant. The project is twofold as it is not only an upliftment project but it’s also an initiative for tackling the need for skilled workforce in the semiconductor industry.
Other factors to consider are the economic implications of such a plant. Locally, while the plant will create 27000 jobs, direct and indirect, the upstream and downstream operations of the plant will create more. From procurement of supplies and raw materials needed to make the chips to distributors and sales. This spillover will create more opportunities.
Along with tourism, the presence of the plant will diversify the economy from the traditional sectors.
Assam will become a destination for high-tech investments and investors as the state govt has made proactive policies to facilitate ease of doing business.
Nationally, this is one step in the plan to make India a hub for electronics manufacturing and design. The semiconductor supply chain was hit during the pandemic and experienced significant shortages. Hence semiconductor chip manufacturing in India will diversify the supply chain with the added benefit of being self-sufficient. Politically, India would be better positioned to mould its future. Another important aspect that can be considered is security. The “Made in India” brand creates trust compared to the “Made in other countries” brand. Locally made chips can be designated to come from trusted sources. And can be used in cybersecurity, and network security applications.
For Assam and the Northeast, the Semiconductor plant is a one-way ticket to prosperity through integration into the global economy.
(Mmhonlumo Kikon is a Fellow at the India Technology Policy Pacific Forum)
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