Despite frequent floods and an ecologically sensitive location, what drives Assam’s position in electronics and semiconductor manufacturing investments? K S P V Pavan Kumar (IFS) from the Directorate of Information Technology, Electronics and Communications (DITEC), Assam, discusses the state’s proactive initiatives with EFY’s Nijhum Rudra.
Q. What is the current scenario of Assam’s growth as an electronics and semiconductor manufacturing powerhouse? What challenges are disrupting this growth?
A. The landmark initiative in this journey is developing a semiconductor unit in Morigaon by Tata Semiconductor Assembly and Test Pvt Ltd (TSAT), with a massive investment of ₹270 billion. This facility, slated for completion by mid-2025, will utilise advanced packaging technologies such as flip chips and integrated systems in packages (ISIP), with a projected production capacity of up to 48 million semiconductor chips daily. While Assam faces challenges such as the need for a skilled workforce, supply chain integration, and global competition, the state is adopting targeted strategies to build a robust and conducive ecosystem for its semiconductor industry.
Q. How will Tata’s Morigaon facility change the economy of Assam as well as India? What would be the direct and indirect employment numbers?
A. The facility is projected to create approximately 15,000 direct jobs and 11,000 to 13,000 indirect jobs, totalling up to 28,000 employment opportunities. The plant is anticipated to catalyse the growth of ancillary industries, including logistics, maintenance, and raw material suppliers, thereby creating additional employment and economic opportunities. Boasting advanced packaging solutions, as I said earlier, the facility positions Assam as a pivotal player in India’s technological landscape, attracting further investments.
Q. Assam is prone to heavy floods. How is the government addressing this recurring flood issue?
A. Recognising the importance of reliable infrastructure for the semiconductor industry, the government is locating facilities in areas less prone to flooding to minimise operational disruptions. It is also conducting thorough environmental impact assessments before project approvals to identify potential risks. Already, 206 water bodies have been pinpointed for flood mitigation, based on a study by the North Eastern Space Applications Centre (NESAC).
Additionally, in collaboration with the Asian Development Bank (ADB), the ‘Assam Integrated Flood and Riverbank Erosion Risk Management Investment Program’ (AIFRERMIP) is being implemented to introduce long-term remediations based on global best practices. The Parliamentary standing committee on water resources has recommended strengthening embankments, dredging rivers, and addressing river erosion to enhance flood management and reduce their impact on local communities and industries. Furthermore, comprehensive resilience plans have been introduced, focusing on both physical infrastructure improvements and community-based programmes while integrating advanced technological solutions to boost safety and resilience.
The state cabinet has initiated measures to enhance business operations through the development of roads, waterways, and overall logistics, too. The Assam Road Network Master Plan (RNMP), 2023 prioritises the development of a higher-order road network spanning 18,421 kilometres (11,444 miles), including state highways, major district roads, and national highways. The Assam Logistics Policy (2022) has allocated 15% of industrial park land for logistics infrastructure and prioritised land conversion for setting up logistics facilities.
Q. Why should Assam be the preferred investment location among the seven sisters in northeast India?
A. Assam, as the gateway to Northeast India, offers strategic connectivity to Southeast Asia through the Act East Policy, facilitating trade and economic ties. The state’s information technology (IT) and electronics system design and manufacturing (ESDM) policy provides subsidies, power tariff rebates, and other fiscal benefits to attract investments. With active development of special economic zones (SEZs) like Guwahati-Baihata Chariali and Tinsukia industrial zones, Assam aims to foster tech and manufacturing industries. The state also boasts a large, educated talent pool, particularly in technical fields, from institutions like IIT Guwahati. Besides, Assam offers abundant resources, including land, raw materials, and renewable energy like hydropower, crucial for energy-intensive industries. Lower costs of labour, utilities, and real estate make it an attractive, cost-effective destination. The centre’s support for semiconductor manufacturing and R&D also bolsters the state’s appeal, as it has been highlighted in India’s national ESDM strategy. Enhanced logistics infrastructure with projects like Brahmaputra River development for cargo and Guwahati as the region’s aviation hub further strengthens its investment potential.
Q. Coming to Assam’s semiconductor policy, what are its key highlights?
A. The government of Assam shall provide an additional 40% of the capital expenditure assistance given by the government of India. Capital subsidy will be based on fixed capital investment as defined in clause 4.2.3 of this policy. A 100% stamp duty exemption on lease/sale agreements has been extended for land or built-up space allotted by the government, Assam Industrial Development Corporation, and designated development authorities to eligible projects/units under this policy.
The state will further provide incentives in power tariffs of up to 50% of the power tariff for 10 years from the date of commercial operations, disbursed annually. Additionally, an uninterrupted potable water supply to semiconductor projects will be provided at the project site at ₹5 per cubic metre for the first 10 years of operation.
Q. Is the policy part of the IT and Electronics Policy 2017 or different?
A. Both are different, and the latter one has already expired. Hence, in August 2023, the Assam government introduced the ‘Assam Electronics (Semiconductor, etc.) Policy 2023’, aiming to position the state as a powerhouse for semiconductor manufacturing and electronics production. However, the 2017 policy still enjoys some rights to provide a range of incentives to attract investments in the ESDM sector, such as rebates on land costs, capital subsidies, power tariff concessions, and lease rental subsidies.
Q. Are the benefits mentioned in the semiconductor policy also available to electronics manufacturers engaged in sectors like printed circuit board assembly (PCBA)?
A. The benefits and subsidies mentioned in the semiconductor policy are only applicable for chip firms such as Outsourced Semiconductor Assembly and Test (OSAT), assembly testing marking and packaging (ATMPs), and fabrication plants (fabs). Capital expenditure subsidies and land allotments differ for chip firms and electronics manufacturing services (EMS). The aids rely on the company’s investment volume, targeted production, and contribution to India.
Q. How many IT and semiconductor parks are there in Assam?
A. Assam is developing a tech park and ESDM cluster over 40.47 hectares (100 acres) as an electronics and IT hub for the entire northeastern region of India. Top-notch technical and management resources are available locally due to proximity to engineering colleges such as IIT and IIIT. ‘Tech City’ is being prepared to provide plug-and-play facilities for electronics manufacturing centres, IT/ITES companies, BPO businesses, and entrepreneurs to set up software development bases.
Q. Are there any government initiatives to improve skill development and educational standards across the state?
A. There are many. First, we have Assam Skill University (ASU), which aims to provide industry-aligned and flexible skills education. Established in Mangaldai, Darrang district, this project is supported by a $112 million loan from the Asian Development Bank (ADB), with the central government facilitating this funding. With the centre’s support again, the Assam government has secured approval to establish an Indian Institute of Management (IIM) near Guwahati. It will be located on a 190-acre (76.8 hectares) plot in Marabhita, Kamrup district, and mentored by IIM Ahmedabad. This initiative, pushed by Honourable Chief Minister Himanta Biswa Sarma after 18 months of efforts, aims to boost Assam’s educational and economic development. In May 2022, the state government entered into a 10-year agreement with Tata Technologies, where the latter will transform 34 polytechnics and 43 government ITIs into centres of excellence (CoEs). This initiative integrates Industry 4.0-relevant technologies, updates infrastructure, and encompasses advanced technical courses such as additive manufacturing (3D printing), electric vehicle (EV) product design and development, and industrial robotics. The total proposed investment for this project is approximately ₹23.9 billion.
