Gear Shift #3: ASML in The Hague, Two State Elections, and India's Chip Map Rewrites Itself

When the second edition of Gear Shift went out on April 25, the story was about geography. India’s semiconductor map had expanded beyond Gujarat to Odisha, Dholera had its legal framework, and the US-India TRUST pact had moved from dialogue to execution. Three and a half weeks later, the story has shifted again. This time the shift is geopolitical.

On May 16, in The Hague, Tata Electronics and ASML signed a strategic partnership in the presence of Prime Minister Modi and Dutch Prime Minister Rob Jetten. That sentence contains more consequence for India’s semiconductor future than almost anything else that happened this fortnight. ASML is not just a chip-equipment supplier. It is the only company on the planet that manufactures EUV lithography machines — no advanced chip below 7nm gets made without one — and its DUV immersion systems, which Tata’s Dholera fab will run on, are precisely the machines the United States has been blocking China from acquiring.

The same fortnight saw two state assembly elections resolve in ways that matter for industrial policy. The BJP won both Assam and West Bengal, creating — for the first time in roughly five decades — a politically aligned corridor from Bihar through Bengal, Odisha and Assam, all under the same dispensation as the Centre. I want to be clear-eyed about what this actually means for manufacturing, because the political signal and the industrial implication are different things, and the gap between them is where MSME opportunity tends to live.

Here is what happened, and why it matters for manufacturers in the Northeast.

Story 1: The Machine That Gates Global Chipmaking Is Now Coming to India

There is a useful way to understand ASML’s position in the semiconductor supply chain: every chip in your phone, your car and your data centre was made using equipment that passed through a facility in Eindhoven, Netherlands. ASML’s EUV lithography machines are so technically complex that no other company has successfully built a competing product. Its DUV immersion scanners, used for the 28nm to 110nm range that Tata’s Dholera fab will produce, are subject to Dutch export controls that now effectively freeze China out of the technology. India has just been let in.

On May 16, Tata Electronics and ASML announced their strategic partnership at a ceremony in The Hague, signed by Tata Electronics CEO Randhir Thakur and ASML CEO Christophe Fouquet, with PM Modi and Dutch PM Rob Jetten present. Tata Electronics’ press release describes four work-streams: deployment of ASML’s holistic suite of lithography tools at the 300mm Dholera fab; joint R&D infrastructure to support long-term technology depth; accelerated talent development for local lithography engineers; and supply-chain resilience measures around the fab ecosystem. The Organiser Weekly’s coverage summarises the diplomatic context — this was the flagship industry outcome of Modi’s Netherlands leg.

The Dholera fab itself is a ₹91,000 crore investment targeting 50,000 wafers per month across the 28nm to 110nm node range, aimed at automotive ECUs, AI edge devices and mobile applications. Trial production is targeted for late 2026. Christophe Fouquet’s comment at the signing is worth noting: “India’s rapidly expanding semiconductor sector represents many compelling opportunities, and we are committed to establishing long-term partnerships in the region.” India TV News has a live account of the full Netherlands bilateral, which produced 17 formal outcome documents.

The strategic read here is not subtle. ASML’s China revenue dropped from 33% of net system sales in 2025 to a projected 20% in 2026, as Western export controls tighten. The India partnership is being built at precisely the moment ASML needs to redirect its DUV pipeline. India is not just a recipient here — it is a geopolitically convenient destination for technology that can no longer go east.

One caveat worth stating plainly: the MoU is a commitment to deploy and support, not a signed equipment-purchase contract. The capital expenditure for the individual DUV systems — which run from single-digit to double-digit millions of dollars per unit depending on generation — will follow in tranches as the Dholera fab builds out. Trial production by late 2026 is the stated target; semiconductor fabs routinely slip those timelines, and the Dholera site was roughly half-built as of April 2026.

The MSME angle: ASML’s “supply-chain resilience” work-stream explicitly covers local sourcing around the fab ecosystem. Specialty gases (ultra-pure nitrogen, argon, hydrogen fluoride), precision cleaning services, logistics for fragile photomasks, and facility maintenance are all categories where local suppliers qualify during the 18–24 months before commercial production begins. Northeast firms that are actively building toward Jagiroad vendor qualification — investing in quality systems, documentation and logistics discipline now — are simultaneously building the credentials that Tata’s central procurement will look for in Dholera ancillary categories. The qualification work is not site-specific.

Story 2: What Else Modi Brought Back from Europe

The Netherlands leg was not only about ASML. India Blooms catalogued the full CEO round-table, which included Philips, NXP Semiconductors (a major automotive chip maker whose India design footprint is expanding), ASML, and logistics-technology firms. PM Modi’s own statement at the round-table — “Electronics, once a major import item, has now become India’s largest export item” — captures the policy framing the government wants associated with the Dholera and Jagiroad investments.

The broader bilateral with the Netherlands produced an upgrade to a Strategic Partnership, a Green Hydrogen Roadmap, Critical Minerals cooperation, and — importantly for Northeast stakeholders — an Indo-Dutch Centre of Excellence for floriculture in Tripura and a dairy-training facility in Bengaluru. The floriculture centre is a small announcement in the scheme of the trip, but it is the only Netherlands-MoU outcome that lands directly in the Northeast, and it signals New Delhi’s willingness to route European technology partnerships into NER clusters, not just the western states.

From Sweden on May 17, Modi and PM Ulf Kristersson committed to doubling bilateral economic exchange in five years. Sweden matters for semiconductors through two angles: LKAB’s Kiruna deposit (the largest known rare earth oxide reserve in Europe, relevant for permanent magnets and EV components) and the Ericsson-Airtel joint ventures building India’s 5G radio network, which in turn creates domestic demand for the kind of compound semiconductors SiCSem is now building in Odisha. The first India-Nordic Summit since 2022 was also held in Oslo on May 18.

The macro framing came from Brussels, where EU Commission President Ursula von der Leyen described the India-EU Free Trade Agreement as “the mother of all deals” and said it would be signed by end-2026. If that deadline holds, it changes the tariff arithmetic for electronics exports from both the Dholera cluster and the Jagiroad facility in ways that the current TRUST framework with the US does not fully address.

The MSME angle: The Indo-EU FTA is not a near-term procurement story for most MSMEs. But the semiconductor-supply-chain angle matters: an FTA with the EU will, in its current draft form, include rules-of-origin provisions for electronics. Understanding those provisions early — particularly around PCB assembly and OSAT output — will determine whether Northeast manufacturers can route exports through the Dholera or Jagiroad channels and qualify for preferential tariffs. It is worth tracking the FTA negotiations’ electronics annex specifically.

Story 3: India Is Preparing to Double Its Semiconductor Incentive War Chest

Business Standard reported on May 15 that the Centre is preparing to take direct financial support for the semiconductor sector to approximately $20 billion — roughly double the original $10 billion ISM envelope. If finalised, that would put India ahead of Malaysia ($3.4 bn), Vietnam ($3 bn) and Singapore ($3–6 bn), and within meaningful range of South Korea ($23 bn) and Japan ($27 bn), the two Asian benchmarks the government has explicitly cited.

The mechanics behind this number are worth understanding. Under the current ISM structure, the Centre offers capital support at roughly 50% of project cost, and state governments typically layer an additional 20%, meaning combined Centre-plus-state subsidies can cover 70–85% of a fab or OSAT project’s capital expenditure. Gujarat, for instance, offers a 75% land subsidy for the first 200 acres of a fab facility plus concessional power. Assam’s semiconductor policy offers 40% capital support plus infrastructure co-investment. The $20 billion figure being discussed in North Block would extend and deepen these provisions rather than replace them.

The ISM 2.0 programme summary on PIB makes clear that the second phase pivots from attracting fabs to building the upstream ecosystem: semiconductor manufacturing equipment, specialty materials, chip design IP, and industry-led R&D centres. This is the part of the supply chain India currently imports in entirety. Building domestic capability in even two or three of those categories would change the cost structure of every ISM-approved facility already in the ground.

The important caveat: the Budget 2026-27 allocation for ISM 2.0 is currently ₹1,000 crore as a token provision while the full scheme architecture is being designed. The $20 billion is the outer boundary of what the government is considering, not a committed outlay. But the direction of travel is clear enough that positioning ahead of the formal Cabinet notification is the rational move for firms in equipment-adjacent industries.

The MSME angle: The equipment and materials focus of ISM 2.0 is the most directly accessible opportunity for Northeast MSMEs that the semiconductor story has produced so far. Advanced semiconductor fabs require industrial gases, precision chemicals, water-treatment systems, clean-room consumables, and specialised facility services. None of those require semiconductor expertise to supply. They require quality systems, documentation discipline and the ability to pass an OEM vendor audit — which is achievable for a well-run MSME with a year of preparation. The ISM 2.0 scheme, when notified, is expected to carry a dedicated MSME supplier-development component.

Story 4: Two More Units Clear Cabinet — The ISM Map Keeps Expanding

On May 5, the Union Cabinet approved two additional semiconductor units under the India Semiconductor Mission, taking the total approved-project count to 12 and cumulative ISM investment commitments to approximately ₹1.64 lakh crore across six states.

The first approval is Crystal Matrix Limited at Dholera, Gujarat — a compound semiconductor and ATMP facility targeting Mini and Micro-LED display applications at a project cost of approximately ₹3,068 crore, with a designed annual capacity of 72,000 square metres of display panels. This is the Dholera cluster’s first compound-semiconductor unit; it joins the Tata fab, Micron ATMP and Kaynes OSAT on the same industrial campus, making Dholera the highest-concentration semiconductor site India has assembled.

The second is Suchi Semicon at Surat, Gujarat — an OSAT facility for discrete semiconductors at approximately ₹868 crore, with a designed capacity of 1,033 million chips per year. Discrete semiconductor devices (diodes, transistors, power semiconductors) serve industrial, automotive and consumer electronics markets and have a shorter qualification cycle than advanced logic chips, which means Suchi Semicon’s procurement ramp will open faster than most ISM facilities. Prameya News has the Cabinet brief.

The running ISM tally for context:

The MSME angle: The Suchi Semicon facility’s discrete-semiconductor focus means its ancillary vendor requirements will open for qualification earlier than most other ISM projects. Logistics, packaging materials, industrial gases and facility services for a smaller OSAT unit are approachable for MSMEs in Gujarat’s MSME belt — and for Northeast firms building credentials to present at Jagiroad, qualifying as a vendor at Suchi Semicon first is a credible pathway.

Story 5: Assam After the Election — What the Numbers Mean on the Ground

The BJP-led NDA won 102 of 126 seats in the Assam assembly elections, results for which came on May 4. Himanta Biswa Sarma was sworn in for a consecutive NDA term on May 12 at Khanapara, with PM Modi attending the ceremony. The Northeast Today account of the post-poll commitment frames the BJP’s Sankalp Patra — 31 specific commitments — as the policy framework the government adopted at its first Cabinet on May 13.

On the industrial front, the signal I found most significant came on May 14, when CM Sarma reviewed Advantage Assam 2.0 implementation status and reported that over 60% of the ₹5 lakh crore in investment commitments made at the February 2025 summit are in advanced stages of implementation, with some units already operational. That is a notable conversion rate for a state-level investment summit — the industry benchmark for Indian state summits is closer to 25–40% moving from MoU to ground. I would treat the 60% figure as a chief ministerial assessment rather than an independent audit, but even at half that claimed rate, the volume of projects actually moving is material.

The Tata Group’s own page on the Jagiroad facility and the PIB press note from December 2025 remain the most authoritative public sources on TSAT’s status. What the public record confirms: ₹27,000 crore investment, 592-acre site at the former Nagaon Paper Mill at Jagiroad, designed capacity of 48 million chips per day at full run, and a combined direct and indirect employment target of approximately 27,000 jobs. Three packaging technology platforms — Wire Bond, Flip Chip, and Integrated Systems Packaging — will be operational. First commercial chips from Jagiroad are targeted for 2026, making TSAT the only semiconductor assembly and test facility in the entire eastern half of India when it commissions.

The MSME angle: The vendor categories that open around a commissioning OSAT facility are predictable — and none of them require chip-making expertise. When Kaynes Semicon ramped up at Sanand in early 2026, the immediate requirements were for logistics operators, secure transport providers, packaging materials suppliers, specialty-gas distributors, and precision cleaning services. The same cycle will play out at Jagiroad. The window for vendor pre-qualification is now, before procurement opens, not after.

Story 6: Two Elections, One Alignment — What the Bengal and Assam Results Actually Mean for Industry

I want to approach this section carefully, because the gap between political commentary and industrial reality is large, and it would not serve you to collapse them.

The BJP won the West Bengal assembly election on May 4. According to election data from multiple sources, the party secured 207 seats, ending Mamata Banerjee’s 15-year TMC government. Suvendu Adhikari was sworn in as West Bengal’s first-ever BJP chief minister on May 9 at Brigade Parade Ground, with the ceremony timed to Rabindranath Tagore’s birth anniversary. The simultaneous BJP victory in Assam on May 4 and Sarma’s return means that, for the first time since the 1970s, Bihar, Jharkhand, Odisha, West Bengal and Assam are all under NDA governments simultaneously, aligned with the Centre.

The industrial-policy implications are real, but they require separating early signals from structural changes.

On the early-signal side: at the BNCCI’s 139th AGM on May 12, state BJP president Samik Bhattacharya telegraphed a new land policy modelled on Haryana, Maharashtra and Punjab, the scrapping of the Urban Land Ceiling Act, and an end to political obstruction over industrial land. The first Cabinet on May 11 approved six decisions including the outline of a Durgapur-Asansol industrial corridor, joining Ayushman Bharat and other centrally-sponsored schemes that the previous government had boycotted, and an age relaxation for government job applicants. Business Today covered industry bodies’ reactions on counting day — BNCCI and BCC&I both used the phrase “a new dawn,” and Lux Industries, Dollar Industries and RPSG group stocks rallied on the results.

The most consequential infrastructure call is the ₹25,000 crore Tajpur deep-sea port project. Business Standard reported on May 6 that the project — stalled since 2022 when the TMC government and the Adani Group could not agree on terms, and again in December 2025 when a re-tender received inadequate participation — has been revived as a Centre-State priority. A deep-sea port at Tajpur, capable of handling vessels with a draft above 12 metres, would be transformative for the eastern supply chain in a way the Syama Prasad Mookerjee Port at Kolkata currently cannot match, constrained as it is to 7.5–8 metre draft vessels and a 3.5-day average vessel turnaround.

On the structural-constraint side: The Federal’s analysis of Bengal’s fiscal position puts projected state debt at over ₹8.15 lakh crore, with debt servicing alone at approximately ₹98,000 crore in 2026-27. The new government has made large promises and has a real mandate to deliver on them, but the fiscal arithmetic will constrain how quickly it can offer the kind of capital subsidies Andhra Pradesh and Gujarat use to attract anchor industrial investments. An aligned Centre-State relationship changes the flow of centrally-sponsored funds into West Bengal significantly — but industrial transformation is a five-to-ten year project, not a 90-day one.

What the political alignment does create is a policy environment where Northeast logistics infrastructure — the Chicken’s Neck problem, the Dankuni freight corridor gap, the Brahmaputra waterway — can be addressed by governments at both ends of the corridor without the prior situation of state and Centre at cross purposes. If you want the detailed logistics case, our Locked Gate report on the East and Northeast logistics roadmap lays out precisely where the infrastructure gaps are, what they cost freight moving in and out of Assam, and what a coordinated Centre-State action plan could look like. The political conditions to act on that analysis now exist in a way they have not for decades.

The MSME angle: For MSMEs in Assam supplying the semiconductor, agri-processing or logistics ecosystems, the Bengal election result matters less immediately than the Assam result. What it changes over the medium term is the commercial viability of routing goods through the eastern corridor — via Jogighopa and Pandu, down through West Bengal to Haldia or a future Tajpur port — rather than the longer overland route through the Siliguri Corridor. That routing change, when it becomes reliable, reduces logistics costs for Northeast-manufactured goods in a way that will show up directly in the cost competitiveness of TSAT’s supply chain.

What This Means for Northeast MSMEs

The pattern I see across these five stories is the same one that has been building since Gear Shift #1: the decisions are being made now, the facilities are under construction, and the procurement windows — the moment when vendors actually get qualified and contracts get written — are 12 to 24 months out.

The ASML-Tata partnership is the most significant development of the past fortnight precisely because it moves Dholera from “planned fab” to “fab with a credible technology partner.” That changes the risk profile for every vendor in the ecosystem and every MSME thinking about whether to invest in quality systems and certifications to bid into the semiconductor supply chain.

The Bengal-Assam political alignment, taken together with the ISM 2.0 preparation and the Tajpur revival, creates the most structurally favourable environment Eastern India has had for industrial investment in a generation. Whether that environment produces actual factories depends on the fiscal and execution follow-through — and that is something to track over the next four to eight quarters, not assume.

The next edition of Gear Shift will track the TSAT Jagiroad commissioning announcement, the formal Cabinet notification of ISM 2.0’s full architecture, and any movement on the Tajpur port re-tender.

Gear Shift is a fortnightly roundup of India’s manufacturing and industrial policy developments, with a focus on implications for MSMEs in Northeast India. Published by Nitisagar Advisory, Guwahati. To receive the next edition, visit nitisagar.com.