Tamil Nadu pitches hard for semiconductor industry investments; working on EV policy

Ritu Jha-

Thangam Thennarasu is like a man on a mission. “We have thrown our hat in the ring,” the minister for industries for Tamil Nadu state in southern India declared. Thennarasu and his team of bureaucrats were in the San Francisco Bay Area to attend an investment roundtable to discuss opportunities for growth and investment in his state.

The event was hosted by the Consulate General of India in San Francisco in partnership with US-India Strategic Partnership Forum (USISPF) and FalconX in Milpitas, California on July 12.

This visit, not Thennarasu’s first to Silicon Valley, was focused on the semiconductor industry, and the minister shared that he had held discussions with Intel, Western Digital, Microsoft and Sanmina Corporation before attending the Semicon West conference in San Francisco.

Tamil Nadu is India’s second-largest state economy, accounting for 9.47% (approximately $300 billion) of India’s Gross Domestic Product (GDP) in 2020-21. The state’s goal is to achieve a US$1 trillion economy by 2030.

“We give lot of emphasis on electronics (manufacturing and fabrication) and the valley is the right destination,” Thennarasu said in an exclusive interview to indica. “This is what bring us here. It has given us an opportunity to understand how semiconductor industry works.”

As part of the state delegation, it was Additional Chief Secretary S Krishnan’s responsibility to present what the Tamil Nadu government offers in terms of opportunities in both conventional as well as emerging technologies.

As part of the semiconductor push, Tamil Nadu is also hoping to make its capital Chennai and indeed the rest of the state the electric mobility (EV) capital of the country by building by creating an ecosystem.

“Automobiles will depend on chips, any appliance associated with your life will depend on chips,” Thennarasu said. “We have understood that tomorrow’s technology will revolve around the semiconductor industry. The talent pool is available and we are the largest producer of technically skilled people.”

In this context, Thennarasu said, it is Tamil Nadu’s strongest pitch.

“Every element of this industry is intense, it’s huge, but we are confident that Tamil Nadu can support not just the fabrication side, but also the design and server side, and of course any other associated segment in the supply chain ecosystem.”

Thennarasu said he is not really worried about a possible recession or a black swan event like the pandemic. “When the pandemic came, our economic roadmap changed, and we adapted,” he said. “There will always be challenges and we accept that, but need to focus on our goals.”

Apart from semiconductors, Thennarasu said his government is keen on a transparent policy on making Tamil Nadu the EV capital of India. “This policy should align with industry needs, but the responsibility is a shared one. A government can give you policy, but the industry will need to back it. When we talk about the EV ecosystem, we should also talk about batteries. Our policy should support the entire ecosystem.”

Additional chief secretary Krishnan said, “Companies have been sharing their concerns with us and they are working hard to resolve those issues. Ola is a big manufacturer and has been sharing its concerns whenever they come up.” According to a media report, Ola announced a ₹2,400 crore (approximately $300 million) MoU with the Tamil Nadu government in December 2020. Ola did not respond to an email sent by indica. This report will be updated once Ola responds.

Krishnan said vehicle safety regulation handled by the Central government in New Delhi. He said that batteries blowing up or vehicles catching fire is also being investigated. “A comprehensive report is expected shortly, and manufacturers acutely aware of the problems,” Krishnan said.

He added that regulation on EV and battery testing facilities is set up by the ministry of road transportation and highways. “They come up with the standard, so that is not within the state mandate. We are talking to manufacturers because the companies are located in Tamil Nadu and we are seriously concerned about consumers,” Krishnan said. “We are speaking with the Union ministry as well to make sure the issues are resolved at their end.”

Deepak Bhagat, vice president, global cloud services, SAP, who attended the investment roundtable told indica this is an opportunity for India, given the Taiwan-China rift and the US too will need fabrication partners in various countries. “That is why Apple has a manufacturing unit in India. The population of China is getting old and the demographic dividend is in India’s favor. I think India should capitalize on that,” Bhagat said.

He added, “India has the talent. It has smart engineers, and I see how regional engineering colleges are producing better students than sometimes even IITs. In semiconductors, they cannot reinvent the industry, but will have to borrow knowhow from companies, install it and get educated on how to produce parts, run it, etc. I think they can do it but they have to strengthen the quality assurance.”

On EV battery issue, Bhagat said that even in the US, when a new model is introduced, it takes a while to stabilize. When I was working at Sun Microsystems as senior director of engineering, we never openly said that a new technology was immediately available for everyone. We called it a control release.”

Raju Reddy, entrepreneur, angel investor, and board member at Falconx, said he is impressed with Tamil Nadu’s progress, but at the same time, “I ideally would like them to benchmark themselves against the best in Asia if not the world.”

“States like Tamil Nadu, Maharashtra, Telangana, and Karnataka are the best in Asia in certain sectors, and I think it would be more beneficial to pitch that message like the top three in Asia or the world. That message also helps them attract investments.”