As The Race To Finalise Fab Location Heats Up, States Compete To Unveil Incentives

The Gujarat government on Wednesday (27 July) announced Semiconductor Policy 2022-27 to make the state a hub for semiconductor and display manufacturing.

With the announcement of its semiconductor policy, Gujarat has become the first state in India to have a dedicated policy for semiconductor production.

The policy aims to create 2 lakh employment in the next five years.

Gujarat State Electronics Mission will function as the nodal agency for the policy implementation.

Under the policy, the state government will develop a semicon city at Dholera Special Investment Region (SIR).

The project(s) approved by the India Semiconductor Mission [ISM] under the Union Ministry of Electronics and Information Technology will be eligible to receive additional capital assistance from the state government over and above the assistance given by the Centre.

The additional capital assistance from the state government will be provided at the rate of 40 per cent of the capex assistance given by the Centre.

The Fab project, under the policy, will get 75 per cent subsidy on the first 200 acre land acquired.

Furthermore, additional land required for the FAB project or upstream/downstream ecosystem or for other projects approved under ISM, land shall be available at 50 per cent subsidy.

The production unit will get Rs 2 per unit power tariff subsidy for first ten years.

The project will get waiver from paying electricity duty under the provision of Gujarat Electricity Duty Act, 1958.

Stamp duty discount will also be given for project land’s lease, sell and transfer.

The eligible projects will also be entitled for a one time 100 per cent stamp duty and registration fee waiver. A single window mechanism will be set up for fast approval of the projects.

Gujarat's semiconductor policy announcement comes as several states are competing to unveil incentives, over and above the Rs 76,000 crore production linked incentive (PLI) being offered by the Central government, to attract firms to set up chip and display manufacturing units.

In February this year, the Centre announced that a total of five firms -- Vedanta-Foxconn joint venture, IGSS Ventures and ISMC (for chip manufacturing), and Vedanta and Elest (for display fab production) -- have submitted applications for availing incentives under the PLI scheme for semiconductors and display manufacturing.

Several states including Gujarat, Telangana and Karnataka have since been trying to attract the firms to set up the chip and display fabs.

Karnataka scored a big win in May this year, when it bagged a $3 billion investment proposal from ISMC for setting up a chip-making plant.