Govt seeks, receives Tata Group’s reassurance that semiconductor projects will continue as planned amid boardroom tussle

The government has reportedly sought and received assurance from the Tata Group that its $14 billion semiconductor and electronics projects will proceed as planned despite an ongoing leadership dispute at Tata Sons, the conglomerate’s holding company.

According to a report in Bloomberg that quoted sources familiar with the matter, Tata Electronics’ plans to build a semiconductor fabrication plant in Gujarat and expand electronics manufacturing operations remain on schedule.

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The government’s outreach came last week through a senior official from the Ministry of Electronics and Information Technology, amid a dispute between Tata Sons and majority owner Tata Trusts over Chairman N Chandrasekaran’s reappointment and the company’s decision to comply with a regulatory directive on listing, as mentioned in the report.

This reassurance is important for New Delhi, which has prioritised semiconductors and electronics in Prime Minister Narendra Modi’s industrial strategy. The government is relying on Tata to help establish a domestic manufacturing base in sectors currently dominated by China, Taiwan and South Korea.

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On September 17, the Tata Sons board supported Chandrasekaran for another five-year term, despite Tata Trusts Chairman Noel Tata voting against the resolution. Tata Trusts, which owns about 66% of Tata Sons, later called the move "illegal." The board also decided to explore a potential listing of Tata Sons, a decision opposed by Noel Tata.

Tata Electronics is developing India’s first commercial semiconductor fabrication plant in Dholera, Gujarat, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp. The approximately $11 billion project will produce chips for automotive, mobile, computing, communications and other industries using 300-millimetre wafers and 28nm to 110nm nodes.

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The group is also investing around $3 billion in a semiconductor assembly and testing facility in Assam, aimed at packaging and testing billions of chips annually.