According to Reuters, two sources close to the matter say the move is the group's first foray into the world of high-tech manufacturing and comes at a time when the world is suffering from a global semiconductor chip shortage.
Capacity recently explored the impact of this shortage on the telecommunications industry, amid the growing pressure of the Covid-19 pandemic.
Specifically, the group is in discussions with the southern Indian states of Tamil Nadu, Karnataka and Telangana and scouting for land for the outsourced semiconductor assembly and test (OSAT) facility.
Should the site go ahead, the OSAT factory, will assemble and test foundry-made silicon wafers, to create semiconductor chips.
"While they (Tata) are very strong on the software side of things ... hardware is something they want to add to their portfolio, which is very critical for long-term growth," said one source.
The factory is due to begin operations in late 2022 and will create jobs for approximately 4,000 people, one of the sources said, mentioning that access to affordable, skilled workers is key to long-term sustainability of the project.
"Once Tata starts, the ecosystem will come around ... So, it's very critical to find the right place from a labour standpoint," said the source.
The news comes in support of Prime Minister Narendra Modi's Make in India initiative, which aims to encourage companies to develop, manufacture and assemble products made in India as well as to incentivise investments into manufacturing.
