How Maharashtra lost out, once again, in its bid to become a semiconductor manufacturing hub

The proposed $20-billion Vedanta-Foxconn semiconductor fabrication facility at Ahmedabad in Prime Minister Narendra Modi’s home state of Gujarat deals a fresh blow to the decades-old ambitions of Maharashtra to become a hub for this cutting-edge industry.

This is not the first time that Maharashtra, which is India’s richest state, has lost out in the semiconductor manufacturing race. 

In 1976, when the Indian central government decided to set up a semiconductor manufacturing facility, Navi Mumbai was leading the fray for the public sector Semiconductor Complex Ltd (SCL) facility.

A lot of groundwork had happened, with the project office having been set up in the iconic Air India building at Nariman Point in India’s financial capital.

However, politics intervened and Maharashtra lost out to Punjab, with the wily Giani Zail Singh outsmarting Shankarrao Chavan.

The story begins with a meeting of the union Cabinet sometime in May 1976.

Chaired by Prime Minister Indira Gandhi, the cabinet approved the formation of SCL to drive India’s ambitions to manufacture semiconductors. The time was opportune and Taiwan, Israel and even China, were nowhere near the semiconductor powerhouses that they are today. The United States of America towered over the industry, which had taken off with the invention of the first integrated circuit in 1959 by Texas Instruments and Fairchild Semiconductor International.

Originally, 22 different locations across India were in the fray for the SCL plant, which were narrowed down to four by a technical committee that evaluated the feasibility of each proposal. The shortlisted sites included Navi Mumbai, the Chennai suburb of Tambaram, Mohali in Punjab and Bhubaneswar, the capital of Odisha (the home state of present-day electronics and information technology minister Ashwini Vaishnaw). 

Electronics and semiconductor industry veteran Dr M.J. Zarabi, the first officer-on-special duty (OSD) in the Electronics Commission, recalls that the union Cabinet did not specify the location of the plant. “Normally, the location of a PSU facility would be mentioned in the Cabinet note, but that was not the case in this instance”, he said.

The decision of the final location was left to Prime Minister Indira Gandhi and a proposal containing the recommendations of the site selection committee were put up to her. “While a formal announcement was not made, the buzz was that the PM had approved of Mohali as the site for setting up SCL”, Zarabi, the founder of SCL who went on to lead it as the chairman and managing director for years, added.

In March 1997, the Janata Party swept to power at the centre after handing a resounding defeat to the Congress. Soon after a Member of Parliament from Punjab asked a question in the house on whether the location of the semiconductor project had been changed from Mohali to some other place. The answer was provided by PM Morarji Desai, who clarified that there was no change and that Mohali remained the chosen site for the SCL unit.

The reply, published in the newspapers next day, came as a big disappointment to then Maharashtra state government. Shankarrao Chavan, the chief minister from 1975-77 is said to have been very keen to win the project.

Later it emerged that the wily Giani Zail Singh, as the Chief Minister of Punjab at that time, had swung the big stakes battle by offering 51-acres of land to SCL for a token amount of one rupee!

Was politics involved in the choice of Mohali, the adjacent city of Le Corbusier’s Chandigarh over Navi Mumbai, which was then a sleepy suburb of a megapolis that gave India the original swadeshi lobby of the Bombay Club?

The answer may never be known, but what is definitely a matter of record is that SCL in Mohali heralded a small, but influential industrial cluster in a state which was the centre of the agricultural green revolution of the 70s.

The SCL facility started production in 1984, got consumed by a mysterious fire in 1989, and was restarted in 1997.

India’s semiconductor dreams never recovered from that catastrophe.

A fresh hope has been rekindled with Vedanta-Foxconn.

Given that other companies are also looking to tap the $63-billion by 2026 India semiconductor market opportunity, Maharashtra may still get to fulfil its six-decade old dream.

Also read: Indian Semiconductor Design Start-Ups are Struggling to Raise Funds. What's Wrong?

Also read: Anil Agarwal-led Vedanta Group to set up semiconductor manufacturing plant in Gujarat