India seeks to challenge top global chip manufacturers
India’s Tata Electronics has begun the construction of a new $3.2 billion semiconductor plant, which is expected to generate 27,000 jobs.
The plant will be located in Assam, the largest of the states in India’s northeast, and produce over 48 million chips per day using locally-developed technologies, India’s electronics and information technology minister has said.
The plant has already hired around 1,000 locals for the project, Tata chairperson N. Chandrasekaran said at the ‘bhumi pujan’ ceremony (a Hindu ritual performed ahead of construction) for the plant. The facility is expected to generate 15,000 direct and 11,000 to 13,000 indirect jobs when it opens, he said.
In a press release, Tata explained that the chips would be used in automobiles, mobile devices, artificial intelligence (AI), and “other key segments to serve customers globally.”
The move is seen as a major boost for the northeast Indian region. Comprising eight states, it has lagged behind most other parts of India in generating employment opportunities.
Ethnic conflicts and political instability in some states in the area have disrupted economic activity and deterred investment. Moreover, geographical isolation and challenging terrain in the region, connected to the rest of the country by a 20km long corridor, have restricted connectivity and infrastructure development.
The state government of Assam played a key role in the development of the semiconductor plant by signing a 60-year lease agreement with Tata Group for over 170 acres of land in the Morigaon district. The facility will be located on the site of a defunct paper mill.
The move is part of New Delhi’s ongoing effort to boost domestic chip production. In 2021, the government announced the India Semiconductor Mission for the development of semiconductor and display manufacturing in the country. The project has been allotted a budget of nearly $9 billion according to the government.
In February, New Delhi approved three semiconductor plants, including the one being built in Assam, with an outlay of about $15 billion. The two other plants are being built in Gujarat, a national manufacturing hub. In an address to parliament last month, Indian Prime Minister Narendra Modi vowed to make the country a “manufacturing hub of semiconductors” during his third term.
At present, the semiconductor value chain – including the design, manufacturing, and sale of final products – is a complex global network concentrated in the US, South Korea, the Netherlands, Japan, Taiwan, and China.
