Subsidies up to 50, India is fighting for wafer factories!

Source: Semiconductor Industry Observation

    In order to attract chip manufacturers selected under the $10 billion chip subsidy program at the center, the government of Tamil Nadu, India, proposed on Sunday to provide up to 50% capital subsidies -50% capital expenditure assistance for semiconductor manufacturing units established in the state.

    The government of Tamil Nadu stated in the "2024 Semiconductor and Advanced Electronics Policy" released at the 2024 Global Investor Conference that companies approved by the Financial Assistance Center under the semiconductor program will be eligible to enjoy structured incentives for semiconductor manufacturing.

    If the semiconductor project selected by the center establishes a manufacturing factory in Tamil Nadu, it will also be eligible for more personnel training, stamp duty, land and electricity incentives, and other incentives.

    The state government will compensate 50% of the project expenses, with a maximum investment period of 10 million rupees, for internal research and development related to patent, copyright, trademark, and geographical indication registration. For actual term loans for project financing, a 5% interest subsidy should be provided as interest rate rebate.

    "Prototype design is a critical stage before commercialization, where the project company can test the design and identify previous errors. To encourage prototype design within the state, eligible units will receive a 25% subsidy for capital expenditure to establish product testing and prototype design facilities, with a maximum limit of 10 million rupees."

    According to the industrial policy of Tamil Nadu in 2021, semiconductor manufacturing will be regarded as a sunrise industry. While waiting for approval from the Semiconductor Manufacturing Center, companies proposing semiconductor manufacturing projects can apply to the industrial, investment promotion, and business departments of the Tamil Nadu government to obtain sanctions for rewards. However, the distribution of rewards requires approval from the center and subsequent receipt of financial assistance.

    In addition, structured incentives for advanced electronic manufacturing will apply to new and expansion projects invested in the state starting from January 1, 2024. The company should meet a minimum investment threshold of 2 billion rupees and a minimum employment threshold of 150 job positions. According to this policy, the initial investment is 2 billion rupees.

    In addition, for every additional 500 million rupees of investment, at least 35 job opportunities should be created. The unit must meet the minimum investment and employment threshold within a standard investment period of four years. In addition, the company must commit to manufacturing factories achieving at least 20% internal or unit level value-added.