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Himanta Biswa Sarma’s Strategic Moves Landed Tata Chip Facility In Assam

The northeast Indian state will house the region’s first indigenous semiconductor facility. But the project isn’t without challenges.

By Anirban Roy
New Update
Tata

Thirty-eight-year-old Kalpana Das works as a temporary office assistant at the office of the local body, Deosal Gram Panchayat, in central Assam’s Morigaon district. She is happy because the salt-to-software conglomerate Tata Group is coming to Morigaon. Kalpana doesn’t know what exactly the company is planning to do at the defunct project site of the Hindustan Paper Corporation’s (HPC's) Nagaon Paper Mill at Jagiroad. All she knows is that something big is afoot. 

Kalpana is glad because a large industrial complex will need to hire workers, meaning there’s hope that her husband could get a job again. He was a contract worker at the Nagaon Paper Mill and lost his job, getting little by way of compensation when it shut down seven years ago.

The outsourced semiconductor assembly and test (OSAT) facility to be set up by Tata will be the largest private investment in Assam. The Tata Semiconductor Assembly and Test Pvt Ltd (TSAT), a subsidiary of Tata Electronics Ltd, will set up India’s largest semiconductor unit in Morigaon with an investment of Rs 27,000 crore. The fabrication unit will make 48 million chips per day for use in electric vehicles (EVs), consumer electronics, telecom, and mobile phones. Reportedly, even US-based EV giant Tesla may be a client. 

The Assam Government announced on March 10 that Prime Minister Narendra Modi will virtually lay the foundation stone of the project on March 13. Union minister Ashwini Vaishnaw announced on February 29 that construction of the plant will begin within the next 100 days.

Factory siteInside the HPC project site.

The Tata Group reportedly came forward to make the mega-investment without actually finalising the modalities. Assam Minister Jayanta Malla Baruah announced that the cabinet meeting held on March 10 evening directed the state Industries Department to finalise the benefits and subsidies to be offered under the Assam Semiconductor Policy 2023 to the Tata Group for investing Rs 27,000 crore in the state.     

“Initially, we were told that the foundation stone for the Tata Project will be laid on March 13 by Assam Chief Minister Himanta Biswa Sarma. We are excited to know that the PM agreed to lay the foundation stone,” Sushila Boro Deka, president of Deosal Gram Panchayat told The Core. The investment will be showcased as a major achievement of the Sarma administration in the upcoming election campaign. 

Boro Deka says the project will provide over 1,000 local people with direct employment. “About 200 young girls from different villages in Morigaon have already been recruited, and are being imparted training at Bengaluru,” she said, adding that the project will also help provide indirect jobs or livelihoods to more than 5,000 families. 

Plug And Play

Meanwhile, the Tatas have an almost-ready project site. There is no need for earth-cutting or earth-filling. The internal roads are still in good condition. Boundary walls protect the factory and residential complexes. 

In a February 29 press release, Randhir Thakur, managing director and chief executive officer of Tata Electronics, said the group chose the facility because it was strategically located with access to abundant water and green power. Thakur said Assam is closer to the current semiconductor packaging and test hubs in Taiwan, Malaysia, Vietnam, and Singapore. He also said that the technical and engineering workforce required for the plant is available locally.

Jagiroad is located about 55 kilometres (km) east of Guwahati, the largest city in northeast India, and is connected by the four-lane National Highway 27, which is also a part of the ambitious Asian Highway network. Asia’s largest dry fish market is located at Jagiroad, and more than 30% of people in the area are involved with the dry fish trade in one way or the other.

Jagiroad is also on the main railway network, and almost all important trains, including the Rajdhani Express, pass by the station. The Lokapriya Gopinath Bordoloi International Airport at Guwahati is about 75 km west of the project site and connects to almost all important cities in India. There are also more than one dozen luxury resorts located about 30-35 km west of the site. 

The chip fab is expected to need five million gallons of ultrapure water (UPW) daily and is expected to draw it from the Kopili River in Hatiamukh, a tiny village about 5 km north of the site, the same spot used by the HPC paper mill. 

River The Kopili River.

The Assam Industrial Development Corporation (AIDC), the custodian of the project site, is getting it ready to hand it over to the Tata Group. Currently, scrap materials, especially steel, iron, aluminum, and copper wires are strewn around in piles across the campus. A Guwahati-based company, owned by brothers Binod and Dilip Goenka, is working round the clock to clear the site. In addition to clearing the HPC paper plant and office complex located on the south of the highway, the scrap-clearing company is also mandated to demolish 460 buildings, which served as residential quarters of the paper mill employees, scattered on both sides of the highway.   

Sarma’s ‘Masterstroke’  

That’s how sources in the government describe the project’s arrival in the state. The Core learns that the idea for the plant was seeded two years ago at the Taj Wellington Mews in Mumbai. On February 16, 2022, CM Sarma travelled to Mumbai to bestow the Asom Baibhav, the state’s highest honour, on Ratan Tata.  After the brief award ceremony at the Taj Wellington Mews, Sarma met Tata Group chairman N Chandrasekaran and other top officials from Tata Sons, Tata Consultancy Services, Tata Technologies, Indian Hotels, and Tata Motors at Bombay House, the group headquarters.

In the closed-door meeting, Sarma reportedly assured the Tata top brass of full state support, including capital investment subsidy and policy changes, if the group were to consider Assam as its preferred investment destination. He is learned to have built a close relationship with Ratan Tata, which has opened up group investments in healthcare, especially cancer care, in Assam. Despite his frail health, Ratan Tata flew to Assam on April 28, 2022, to inaugurate seven state-of-the-art cancer hospitals. Along with PM Narendra Modi, Tata also laid the foundation for seven new cancer centres in Assam.  The Tata Trust has been working closely with the Assam government since Sarma was the state health minister.   

Laying The Groundwork

Barely a month after Sarma met with the Tata top brass in Mumbai, the Assam government took over the two defunct HPC paper mills at Jagiroad and Panchgram for Rs 375 crore through AIDC. The defunct factories were the bone of contention for many years between the government and its employees. Despite meandering through National Company Law Tribunal (NCLT) processes for long, it was not until September 2021 that the state and mill workers arrived at a compromise where the state government agreed to pay salaries and dues. 

Within 10 days of Sarma’s Mumbai trip, the NCLT opened a tender for the paper mills at the reserve price of Rs 375 crore, which the state government bagged. Within hours of taking over, the government announced that it would promote industrial and economic activities at the sites. On December 19, 2022, the Assam cabinet approved a plan to build a satellite township on 550 acres of the Nagaon mill site. On December 9, 2023, Sarma announced that the Tata Group had proposed to invest Rs 40,000 crore to set up India’s largest semiconductor manufacturing plant at Nagaon. 

The Core reached out to the Tata Group with a detailed questionnaire. A spokesperson for the group said it had no comments to offer and referred to Tata Electronics’ February 29 press release. 

The Niggles

Generating five million gallons of ultrapure water daily could be a challenge. Although the Kopili river is the largest south-bank tributary of the Brahmaputra, it may not have adequate water in the dry months. The Kopili flow irrigation scheme waters nearly 1,600 hectares of largely paddy fields across 16 villages in Morigaon district. New irrigation channels under construction may take away more water from the river. That raises the potential for water conflict between the company and local farmers. Unscientific coal mining in the Kopili's upper reaches in Meghalaya has led to acidification of the river, which has left part of the river’s course biologically dead.  

Another challenge could be the high cost of power. Assam generates only about 250 megawatts of electricity locally. It buys the rest from outside. That means the company will either have to buy costly power, or the state may have to subsidise it. 

For now, the locals are hopeful. Kalpana and her husband are optimistic that The Tata Group’s arrival in the area will charge up the moribund local economy. Like Kalpana, almost everyone in Kagaznagar (Paper City), as the area is known, feels it is going to be a game changer for the insurgency-ravaged state’s poor industrial landscape. Assam is the largest state in northeast India but has remained industrially backward since independence because of a lack of infrastructure, geographical alienation, and subsequently, due to the four-decade-old armed separatist movement spearheaded by the United Liberation Front of Assam. 

Deosal panchayat chief Boro Deka hopes Jagiroad will revert to its glory days of a buzzing business hub when paper mills were running at full tilt.

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