Q.11. “India’s first semiconductor assembly and test facility at Jagiroad shall put Assam on the world semiconductor map and transform the economic landscape of East India.”Examine the above statement with reference to the economic opportunities and employment potential of this mega project.
15,Oct 2024
Posted By : SPM IAS Academy
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Ans: The establishment of India’s first semiconductor assembly and test facility at Jagiroad, Assam is a significant milestone, placing Assam on the global semiconductor map. This mega project not only holds immense potential for transforming the economic landscape of East India, but also for advancing India’s position in the global semiconductor supply chain—a strategically important sector in international relations. The project ties into India’s aspirations of becoming a semiconductor hub, reducing reliance on imports, and boosting its global trade partnerships, all while fostering deeper geopolitical alignments.
Economic Opportunities
Boost to Local and National Economy: The Jagiroad facility will contribute to both the local economy and India’s $1 trillion semiconductor market target by 2030. According to reports by the India Electronics and Semiconductor Association (IESA), the Indian semiconductor market is set to grow at a CAGR of 17%, and Assam’s involvement will bring Eastern India into this high-growth sector. By attracting foreign direct investment (FDI), especially from countries like the US, Japan, South Korea, and Taiwan, this facility will enhance India’s global competitiveness.
Strengthening India’s Supply Chain Resilience: Amid global disruptions in the semiconductor supply chain—exacerbated by the US-China trade tensions—the Jagiroad facility positions India as a key player in reducing the world’s reliance on China for semiconductors. This facility complements India’s Semiconductor Mission, a part of the PLI Scheme, aimed at bolstering supply chain resilience. As semiconductor shortages have affected global industries, especially in automotive and electronics, India’s move will help attract global manufacturers, ensuring a steady supply and forging stronger trade relations with semiconductor-importing countries.
Export Potential and Trade Relations: India currently imports about $24 billion worth of semiconductors annually. With the Jagiroad facility, Assam will contribute to reducing this import dependence and enable India to export semiconductors to key markets like the European Union (EU), US, and Southeast Asia. The International Trade Centre (ITC) has estimated that India’s semiconductor exports could grow by 10-15% annually once domestic production scales up. This enhanced export capacity will boost India’s foreign exchange reserves and strengthen trade ties with tech-heavy nations.
Strategic Diplomacy and Technology Partnerships: The semiconductor sector has become a focal point in international diplomacy, particularly given its strategic importance in the global tech race. India’s collaborations with countries like the US, Taiwan, Japan, and South Korea under various bilateral technology agreements can be leveraged to secure technology transfers, investment, and R&D support for the Jagiroad facility. The Quad (India, US, Japan, Australia) has identified technology, including semiconductors, as a key area of cooperation, enhancing India’s strategic partnerships in the Indo-Pacific region.
Employment Potential
Direct Job Creation: The semiconductor facility at Jagiroad is expected to generate significant direct employment in advanced manufacturing. According to estimates from the Ministry of Electronics and Information Technology (MeitY), for every $1 billion invested, the semiconductor sector creates around 15,000 direct jobs. The Jagiroad facility could potentially create thousands of high-skill jobs for engineers, technicians, and researchers in chip design, testing, and manufacturing, driving employment in Assam.
Skill Development and Technology Transfer: The project will necessitate extensive skill development programs to equip local workers with advanced skills in semiconductor technology. Collaborations with global semiconductor leaders, under agreements like India-Taiwan semiconductor cooperation, will facilitate technology transfer and human resource development. The Skill India Mission will play a key role in upskilling the workforce to meet global standards, turning Assam into a talent hub for high-tech industries. This aligns with India’s broader ambition to develop a $300 billion electronics manufacturing industry by 2026.
Indirect Employment and Multiplier Effect: In addition to direct jobs, the facility will generate indirect employment in areas such as construction, logistics, and service industries. Semiconductor assembly requires a complex supply chain involving raw material suppliers, logistics providers, and testing facilities, which will create numerous opportunities in Assam and the neighboring states. This multiplier effect is likely to stimulate the entire North-East region’s economy, with growth in ancillary sectors like transport, warehousing, and power infrastructure.
Attraction of Global Talent: The semiconductor industry is knowledge-intensive, and the Jagiroad facility will attract global talent in semiconductor engineering, research, and management. This will not only enhance the capabilities of India’s semiconductor sector but will also encourage innovation and entrepreneurship. The influx of talent, especially from countries like Taiwan, Japan, and South Korea, will drive cross-border knowledge sharing and boost Assam’s reputation as a tech-driven innovation hub.
Geopolitical and Strategic Perspectives
Countering Global Semiconductor Shortages: The semiconductor sector has seen supply shortages, especially following the COVID-19 pandemic and US-China trade disputes. India’s push to build a semiconductor facility in Assam is part of a broader geopolitical strategy to diversify semiconductor production away from China. As India strengthens its partnerships with the Quad nations and allies like Taiwan (a semiconductor powerhouse), it enhances its strategic autonomy in the global supply chain.
Global Technology Leadership: With nations like the US implementing their own CHIPS Act to boost domestic semiconductor production, India’s initiative at Jagiroad aligns with global trends in tech self-reliance. This project can help position India as a leader in semiconductor manufacturing, establishing tech partnerships with major economies in North America, Europe, and East Asia, and contributing to India’s growing geopolitical influence.
Strengthening Ties with Taiwan and Other Semiconductor Leaders: India’s collaboration with Taiwan, the world leader in semiconductors, will gain momentum through this project. Taiwan’s Taiwan Semiconductor Manufacturing Company (TSMC) and other key players are potential investors and partners in this initiative. This not only strengthens India-Taiwan ties but also provides a strategic counterbalance to China’s dominance in the region. Such partnerships can deepen India’s role in the global semiconductor value chain and boost its diplomatic standing.
The Jagiroad semiconductor facility represents a transformational project for Assam and the broader North-East region, driving economic growth, employment, and technological advancement. It will position Assam as a critical player in India’s semiconductor ambitions, attract international investments, and foster geopolitical partnerships in the high-tech sector. By aligning with India’s broader goals of self-reliance in technology and strengthening global supply chains, this facility will not only transform the regional economy but also elevate India’s strategic position in the global semiconductor ecosystem.