Why Tata's Semiconductor Unit In Assam Matters More Than You Think

Post-liberalisation, India’s private sector industrial activities have been predominantly concentrated in regions such as Maharashtra, Gujarat, Karnataka, the National Capital Region encompassing Delhi, and adjoining parts of Punjab and Haryana.

This geographical clustering of industrial activity reflects a broader trend of regional economic disparities, with industrialisation being skewed towards the western and southern states. 

Only recently have other states started considering ways to catch up. 

In a significant development on 29 February this year, Assam claimed its entry into the expanding list of investment destinations. The central government approved a production-linked incentive (PLI) for Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) to establish a Rs 27,000 crore semiconductor assembly and testing unit near Guwahati. 

According to official reports, TSAT is set to develop indigenous advanced semiconductor packaging technologies, including flip chip and integrated system in package (ISIP). This facility will produce 48 million chips daily for various sectors, including automotive, electric vehicles, consumer electronics, and telecom. 

This investment in Assam is particularly noteworthy given the broader trend of high-profile technology sector investments favouring regions in the south and west. 

While states like Odisha are still awaiting the breakthrough beyond metals, ports, energy etc., Assam’s inclusion as a semiconductor manufacturing hub represents a departure from the conventional investment pattern, potentially redefining the industrial framework of Northeast India.

Why Assam and how? — an insider story 

Historically, Assam’s economic activities have been largely limited to public sector contracts and direct employment. This narrow economic base posed a challenge to the ambitious semiconductor project, but both the Tata Group and the central government acknowledged these risks. 

As a matter of fact, the Tata Group’s relationship with Assam is quite old. A recent example of that was the establishment of the Assam Cancer Care Foundation in 2018. In 2022, the state government also signed a Memorandum of Agreement with Tata Technologies for 10 years to upgrade government Industrial Training Institutes (ITIs) across Assam into futuristic Centres of Excellence (CoEs). 

Chief Minister Himanta Biswa Sarma used this connection to persuade the Tata Group to set up a semiconductor plant in Assam. Sarma emerged as a key negotiator between the union government and private sector players to secure the unit for the state. 

Beyond personal relationships, this decision was also the culmination of substantial efforts by both the central and state governments, rooted in a series of policy and fiscal incentives. 

Increased tax devolution post-GST, along with a hike in the state’s capital expenditure, gave Assam the financial strength required to attract large-scale investments. 

The state government has introduced sector-specific industrial policies for AI, aerospace and defence, electronics, etc. More importantly, emphasis has also been placed on skill training through institutes like the ITIs and Assam Skill University to produce skilled manpower. 

The Tata Group’s Assembly Testing Marking and Packaging (ATMP) plant in Jagiroad is more than a standalone project; it could serve as a catalyst for developing a comprehensive industrial ecosystem in the region.

The ATMP facility will require a range of downstream and upstream industries to support its operations, thereby triggering positive second-and third-order effects. Local enterprises can now explore avenues to supply the necessary raw materials, components, and services required for the smooth functioning of the ATMP plant. 

The facility has already employed 1,000 people, with this number set to grow significantly as the project advances. At full capacity, the facility is expected to employ 27,000 people, comprising 15,000 direct jobs and an additional 12,000 indirect jobs. 

Moreover, 1,800 women from Assam have been recruited to work in semiconductor processing. 

Looking East — Assam, Southeast Asia and Beyond

Semiconductors are at the core of contemporary global economics and regional geopolitics. Countries like China and Taiwan are heavily investing in their development. 

In this context, the Tata plant could position Assam as a technological hub in eastern India, adding significant strategic value to the region. 

Assam’s strategic location as a gateway to Southeast Asia’s regional and international markets makes it crucial to India’s economic objectives. As the country aims to become a USD 35 trillion economy by 2047, Assam is set to play a significant role in India's ambitions, particularly in contributing to the global semiconductor supply chain.