Lucknow: The Uttar Pradesh cabinet has approved a set of targeted incentives for semiconductor companies willing to commit capital investments of Rs 3,000 crore or more in the state.
The policy framework includes interest subsidies, employee cost support, 10-year GST exemptions, power tariff reliefs, and workforce-linked incentives.
Under the new package, qualified investors can benefit from:
- Interest subsidies and GST exemptions for up to a decade;
- Reduced power tariffs capped at Rs 2 per unit for a defined period;
- Reimbursement of EPF contributions for in-state professionals (up to Rs 2,000 per month);
- Concessional water charges to lower utility overheads.
The cabinet decision comes alongside administrative support for Global Capability Centres (GCC) rules. This is a parallel push to attract technology and innovation hubs to the UP.
The UP government sees this as a catalyst to attract further large-scale investments. According to government data, investment proposals totalling over Rs 2,000 crore.
This includes substantial commitments by firms like Tarq Semiconductors and Kaynes Semicon. These are already under consideration under the UP Semiconductor Policy 2024.
UP’s push toward semiconductors builds on earlier policies focused on electronics manufacturing:
The UP Electronics Manufacturing Policy 2020 offered significant capital subsidies, stamp duty exemptions and electricity benefits to electronics and semiconductor-adjacent industries.
The Semiconductor Policy 2024 refined and expanded support specifically for fabs, compound semiconductors, silicon photonics, sensors, and packaging units (OSAT/ATMP), with fiscal and non-fiscal benefits including up to 75% land rebates and decade-long electricity duty exemptions.
The state has also linked incentives to skilling and R&D support, including reimbursement for stand-alone R&D centres and patent registration costs, to strengthen the local talent pool.
These layered policies reflect UP’s effort to rise up the semiconductor value chain — from assembly and design to high-end manufacturing and innovation.
Why UP for Semiconductors?
Several competitive advantages make UP an attractive destination:
- Strategic Connectivity: With extensive expressway networks and the upcoming Noida International Airport at Jewar, logistical costs and export potential improve for semiconductor firms.
- Large Skilled Workforce: The state boasts a dense talent ecosystem with premier institutions and a pool of engineers and technicians — crucial for high-precision semiconductor operations.
- Industrial Momentum: Beyond semiconductors, the state leads in mobile phone manufacturing — accounting for over half of India’s output — and hosts multiple electronics clusters and SEZs that feed into wider electronics supply chains.
- Business Climate: Recent state reforms such as improved ease-of-doing-business protocols and a single-window clearance portal have enhanced investor confidence.
