UP Cabinet unveils competitive incentives to attract ₹3,000-cr 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.

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.

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.