Uttar Pradesh approves fresh incentives to boost semiconductor investments

The Uttar Pradesh cabinet has approved a fresh incentive package for semiconductor companies investing ₹3,000 crore or more, offering tax breaks, power subsidies, workforce support, and policy backing to position the state as a key hub in India’s semiconductor ecosystem.

In a significant policy move aimed at strengthening its presence in India’s fast-evolving semiconductor landscape, the Uttar Pradesh cabinet has approved a new set of incentives for companies committing capital investments of ₹3,000 crore or more in the state. The measures are designed to lower operational costs, improve project viability, and encourage long-term manufacturing investments in high-technology sectors.

Under the approved framework, eligible semiconductor companies can avail interest subsidies and GST exemptions for up to 10 years. The policy also offers reduced power tariffs capped at ₹2 per unit for a defined period, concessional water charges, and reimbursement of employee provident fund (EPF) contributions for in-state professionals, subject to monthly limits. Together, these benefits aim to make large fabrication, assembly, and packaging projects financially more attractive.

The cabinet decision also complements new administrative rules for Global Capability Centres (GCCs), signalling a parallel effort to draw technology, design, and innovation hubs into the state alongside manufacturing units.

Aligned with India’s Semiconductor Mission

Uttar Pradesh’s latest incentives closely align with the Centre’s India Semiconductor Mission (ISM), which provides fiscal support of up to 50 percent of project costs for eligible semiconductor and display manufacturing units. The state’s push comes at a time when India is actively seeking to build domestic capacity across the semiconductor value chain.

Recently, the Union Cabinet approved a ₹3,700-crore semiconductor manufacturing facility near Noida’s upcoming Jewar International Airport, being set up as a joint venture between HCL and Foxconn. The plant, focused on display driver chips, is the sixth project sanctioned under ISM and is expected to boost regional manufacturing and design activity.

State officials view this project as a catalyst for further investments. According to government estimates, proposals worth over ₹32,000 crore—including plans from companies such as Tarq Semiconductors and Kaynes Semicon—are currently under evaluation under the Uttar Pradesh Semiconductor Policy 2024.

Building a long-term semiconductor hub

The state’s semiconductor push builds on earlier electronics-focused initiatives, including the Electronics Manufacturing Policy 2020 and the more recent Semiconductor Policy 2024. These policies offer a mix of fiscal and non-fiscal incentives, such as land rebates, electricity duty exemptions, and support for R&D, skilling, and patent registration.

Uttar Pradesh is positioning itself as a competitive destination by leveraging strong road connectivity, the upcoming international airport at Jewar, a large engineering talent pool, and an expanding electronics manufacturing base. With layered policy support and a growing investment pipeline, the state aims to anchor fabrication, design, and advanced manufacturing within its industrial ecosystem, contributing to India’s broader semiconductor ambitions.