Tata Group to invest Rs 7,000 crore in building electronics manufacturing unit in Hosur

The Tata Group is expected to invest Rs 7,000 crore in a massive electronic ecosystem to manufacture platforms for smartphones, including those of Apple Inc, among other components at Hosur near Bengaluru.

The investment will be made under the Centre’s Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), aimed at helping offset the “disability for domestic manufacturing of electronic components and semiconductors”, sources said.

The development will come as a shot in the arm for Tamil Nadu, which is making a concerted effort to emerge as the No. 1 hub for electronics manufacturing in India.

The state is currently in “advanced talks” with Pegatron Corporation, the second largest contract manufacturer of Apple iPhones, for establishing its unit near Chennai. It has already secured an assurance from Foxconn, another contract manufacturer of Apple Inc, for investing an additional Rs 7,000 crore to expand its capacity at its plant in Sriperumbudur, 50 km from Chennai.

Sources in the Tamil Nadu government told DH that Tata Sons will invest Rs 7,000 crore for setting up an electronics manufacturing unit at GMR Special Investment Region, a joint venture of GMR group and Tamil Nadu Industrial Development Corporation (TIDCO) in Hosur.

“Around 500 acres have been identified for Tata Sons in Hosur and a formal deal is likely to be sealed in the coming weeks,” a top government source said on condition of anonymity.

“The unit is likely to manufacture platforms for smartphones of several brands including Apple,” the source said.

When contacted, a source in Tata Sons said: “We can confirm that we are building an electronics ecosystem,” without elaborating, including on the amount of investment and potential clients. An email sent to Apple Inc’s spokesperson did not receive any response.

Already home to top 16 electronics manufacturers, including Nokia, Samsung, Flex, Dell, Motorola, Salcomp, HP, and Foxconn, Tamil Nadu is now aiming to contribute 25% of India’s total electronic exports to the world by 2025. India’s electronic exports stood at $11.28 billion in 2019-20.

At present, Tamil Nadu is the second largest manufacturing hub in the country and accounts for 16 percent of national production of electronics and hardware. The state government also released its Electronics Hardware Manufacturing Policy 2020 in September offering a wide range of subsidies for such companies investing in Tamil Nadu.

Tamil Nadu was home to Nokia, the first major mobile phone manufacturer to step onto the Indian soil way back in 2005, whose factory was a symbol of India's economic success story. But after the factory became defunct in 2014 – it has now been revived by another Finnish firm Salcomp – the state suffered a setback.

What is SPECS?

SPECS is aimed at strengthening the electronics manufacturing ecosystem in the country by providing financial incentive of 25 percent on capital expenditure for the identified list of electronic goods that comprise downstream value chain of electronic products.

“The Scheme will be applicable to investments in new units and expansion of capacity/ modernization and diversification of existing units. Application under the Scheme can be made by any entity registered in India,” according to the scheme document.