Uttar Pradesh Cabinet Clears New Incentives for Large Semiconductor Investments The incentive package offers a mix of fiscal and operational support for qualifying companies.
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The Uttar Pradesh cabinet has approved a fresh set of incentives aimed at attracting major semiconductor investments of INR 3,000 crore or more, as the state seeks a larger role in India's fast-developing chip manufacturing ecosystem.
The decision is part of a broader effort to encourage high-technology manufacturing and reduce the operational costs faced by capital-intensive semiconductor projects.
According to officials, the incentive package offers a mix of fiscal and operational support for qualifying companies. These include interest subsidies and exemptions from Goods and Services Tax (GST) for up to 10 years, along with reduced electricity tariffs capped at INR 2 per unit for a specified period.
To support employment, the state will reimburse Employees' Provident Fund (EPF) contributions for professionals hired locally, up to INR 2,000 per employee per month. Concessional water charges are also part of the package to help lower utility expenses.
Alongside these measures, the cabinet has cleared administrative support for rules governing Global Capability Centres (GCCs), which are typically set up by technology companies for research, design and back-office operations. This move signals an attempt to attract not just manufacturing units but also innovation and design activities to the state.
The state's decision aligns with the national push under the India Semiconductor Mission (ISM), which aims to build a domestic semiconductor and display manufacturing ecosystem with central financial support covering up to 50% of project costs for eligible units.
Recently, the Union Cabinet approved an INR 3,700-crore semiconductor manufacturing unit near the upcoming Jewar International Airport in Noida. The project, a joint venture between HCL and Foxconn, will manufacture display driver chips and is among the latest projects cleared under the ISM framework.
State officials view this project as a trigger for further investments. Government data shows that investment proposals worth more than INR 32,000 crore are currently under consideration under the Uttar Pradesh Semiconductor Policy 2024. These include proposals from companies such as Tarq Semiconductors and Kaynes Semicon.
The semiconductor push builds on earlier state policies focused on electronics manufacturing. The Uttar Pradesh Electronics Manufacturing Policy 2020 provided capital subsidies, stamp duty exemptions and power-related benefits for electronics and allied industries.
The Semiconductor Policy 2024 expanded this focus to cover fabs, compound semiconductors, silicon photonics, sensors and packaging units, offering benefits such as land rebates and long-term electricity duty exemptions.
Incentives have also been linked to skill development and research activities, including support for independent R&D centres and patent-related expenses. Officials say this is intended to strengthen the local talent base needed for advanced manufacturing.
With improving road connectivity, the upcoming international airport, an existing electronics manufacturing base and a large workforce, Uttar Pradesh is positioning itself to attract semiconductor projects as India works to reduce its dependence on imported chips.
