Uttar Pradesh steps up semicon push with targeted incentives

The Uttar Pradesh cabinet has approved a set of targeted incentives for semiconductor companies committing capital investments of Rs 3,000 crore or more, signalling a renewed effort to strengthen the state’s position within India’s evolving semiconductor ecosystem. The measures are intended to support manufacturing and high-technology production by easing operating costs and improving the long-term viability of large-scale projects.

The incentive framework offers a combination of fiscal and operational support, including interest subsidies, long-term GST exemptions, power tariff relief, employee cost reimbursements and workforce-linked incentives. Eligible investors can access interest subsidies and GST exemptions for up to ten years, benefit from reduced power tariffs capped at Rs 2 per unit for a defined period, and receive reimbursement of EPF contributions for in-state professionals, subject to a monthly ceiling. Concessional water charges are also included to lower utility-related expenses.

Alignment with National Semiconductor Strategy

The cabinet decision was accompanied by administrative approval of rules governing Global Capability Centres (GCCs), reflecting a parallel effort to attract technology, design, and innovation hubs to the state. Together, these measures underline Uttar Pradesh’s broader industrial ambitions beyond conventional manufacturing.

The state’s latest move aligns with the national semiconductor agenda under the India Semiconductor Mission (ISM), a central initiative aimed at building a sustainable semiconductor and display ecosystem through fiscal support of up to 50 per cent of project costs for eligible units. Recently, the Union Cabinet approved a Rs 3,700-crore semiconductor manufacturing unit near Noida’s upcoming Jewar International Airport. The facility, a joint venture between HCL and Foxconn and the sixth project sanctioned under the ISM framework, is expected to manufacture display driver chips and generate related design and manufacturing activity in the region.

State policymakers view this development as a catalyst for further investment. According to official data, proposals worth more than Rs 32,000 crore are currently under consideration under the Uttar Pradesh Semiconductor Policy 2024, including investments from companies such as Tarq Semiconductors and Kaynes Semicon.

Policy Continuity and Investment Rationale

The current semiconductor push builds on earlier initiatives focused on electronics manufacturing. The Uttar Pradesh Electronics Manufacturing Policy 2020 offered capital subsidies, stamp duty exemptions and electricity-related benefits to electronics and semiconductor-linked industries. This was followed by the Semiconductor Policy 2024, which expanded and refined support for fabrication units, compound semiconductors, silicon photonics, sensors and packaging operations, including OSAT and ATMP facilities. The newer policy provides a mix of fiscal and non-fiscal incentives, such as substantial land rebates and electricity duty exemptions extending up to a decade.

The state has also linked incentives to skills development and research activities. Support measures include reimbursements for independent R&D centres and patent registration costs, aimed at strengthening the local talent base and encouraging innovation. Together, these layered policies reflect an effort to move up the semiconductor value chain, from assembly and design to advanced manufacturing and technology development.

Uttar Pradesh’s investment pitch is supported by expanding expressway connectivity and the upcoming Noida International Airport at Jewar, which is expected to improve logistics and export potential. The state also offers access to a large pool of engineers and technical professionals, alongside a strong electronics manufacturing base that accounts for a significant share of India’s mobile phone production. Recent administrative reforms, including single-window clearance mechanisms, have further sought to improve the business environment.

With coordinated support at both the central and state levels, India’s semiconductor ambitions are creating opportunities for early-stage investments at scale. Through its latest incentive package, Uttar Pradesh aims to anchor key segments of the semiconductor value chain within the state, positioning itself as a potential hub for manufacturing, design and innovation within India’s technology landscape.