UP Cabinet Approves Incentives For Semiconductor Investments

In a strategic move to deepen its foothold in India’s emerging semiconductor ecosystem, the Uttar Pradesh cabinet has approved a set of targeted incentives for semiconductor companies willing to commit capital investments of ₹3,000 crore or more in the state. The policy framework, aimed at bolstering manufacturing and high-technology production, includes interest subsidies, employee cost support, 10-year GST exemptions, power tariff reliefs, and workforce-linked incentives — all designed to reduce operating costs and improve long-term project viability.

Under the new package, qualified investors can benefit from:

●     Interest subsidies and GST exemptions for up to a decade;

●     Reduced power tariffs capped at ₹2 per unit for a defined period;

●     Reimbursement of EPF contributions for in-state professionals (up to ₹2,000 per month);

●     Concessional water charges to lower utility overheads.

The cabinet decision comes alongside administrative support for Global Capability Centres (GCC) rules — a parallel push to attract technology and innovation hubs to Uttar Pradesh — reflecting the state’s broader industrial ambition.

Riding India’s Semiconductor Momentum

Uttar Pradesh’s incentive decision aligns with the national semiconductor agenda under the India Semiconductor Mission (ISM) — a Centre-led initiative to develop a deep, sustainable semiconductor and display ecosystem across India with fiscal support of up to 50% of project costs for eligible fabs and related units.

Recently, the Union Cabinet approved a ₹3,700-crore semiconductor manufacturing unit, a joint venture between HCL and Foxconn near Noida’s upcoming Jewar International Airport. This facility — part of the sixth semiconductor project sanctioned under ISM — is designed to produce display driver chips and is expected to generate significant manufacturing and design activity in the region.

State policymakers see this as a catalyst to attract further large-scale investments. According to government data, investment proposals totaling over ₹32,000 crore — including substantial commitments by firms like Tarq Semiconductors and Kaynes Semicon — are already under consideration under the Uttar Pradesh Semiconductor Policy 2024.

State Policy Continuum: From Electronics to Semiconductors

Uttar Pradesh’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 Uttar Pradesh’s effort to rise up the semiconductor value chain — from assembly and design to high-end manufacturing and innovation.

Why Uttar Pradesh for Semiconductors?

Several competitive advantages make Uttar Pradesh an attractive destination:

1. Strategic Connectivity: With extensive expressway networks and the upcoming Noida International Airport at Jewar, logistical costs and export potential improve for semiconductor firms.

2. 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.

3. 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.

4. Business Climate: Recent state reforms such as improved ease-of-doing-business protocols and a single-window clearance portal have enhanced investor confidence.

Market Potential and Outlook

India’s semiconductor ambitions, backed by central and state supports, provide a rare opportunity for early entry and scale. The Uttar Pradesh government’s latest incentives aim not only to attract capital but also to anchor future semiconductor value chains — from fabrication to design, assembly, and testing — within the state.

With existing pipeline proposals and policy architecture, Uttar Pradesh is positioning itself as a multi-modal semiconductor hub, capable of attracting global players and contributing meaningfully to India’s technology manufacturing landscape.