Tamil Nadu to tap into semiconductor, electronics sectors; rolls out policy to attract investors

It seeks to create a design ecosystem through incentives, funding, and industry-academia collaboration. The policy will be valid for 3 years from the date of notification. The structured package of incentives will be applicable to new and expansion projects with investments made from Jan. 1, 2024

M.K. Stalin, T.N. Chief Minister; Piyush Goyal, Union Minister of Commerce Industry, Consumer Affairs, Food and Public Distribution and Textiles; T.R.B. Raja, Minister for Industries, Investment Promotions and Commerce; Venu Srinivasan, Chairman, TVS Motors; and foreign delegates releasing the Tamil Nadu Semiconductor and Advanced Electronics Policy during GIM 2024 in Chennai on Sunday. | Photo Credit: M. VEDHAN

To account for 40% of India’s electronics exports, the Tamil Nadu government on Sunday rolled out its ‘Semiconductor and Advanced Electronics Policy 2024’ at the Global Investors Meet (GIM).

The policy seeks to attract anchor investments in semiconductor and advanced electronics manufacturing and create a skilled talent pool of over two lakh persons by 2030. It seeks to create a semiconductor design ecosystem in the State through incentives, funding and industry-academia collaboration. The policy will be valid for three years from the date of notification.

Providing eligible companies with incentives is another important area. Global marquee research and design entities undertaking semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoC), systems & IP cores and semiconductor-linked design; semiconductor equipment design; high-end electronic product design and development; and high-end electronics system design and manufacturing software shall be eligible for the incentives. According to the policy, eligible semiconductor manufacturing units will be offered capital subsidy, special training incentive, product testing and prototyping incentive, and land cost incentive.

The structured package of incentives for advanced electronics manufacturing shall be applicable to new and expansion projects with investments made from January 1, 2024. The companies should meet a minimum investment threshold of ₹200 crore and a minimum employment threshold of 150 jobs for the initial investment of ₹200 crore.

Further, for every additional ₹50 crore in investment, a minimum of 35 jobs should be generated. The minimum investment and employment threshold must be met before the standard investment period of four years. Additionally, the companies must commit themselves to a minimum of 20% in-house/unit-level value addition from the manufacturing facility.

Implementation plan

The implementation of the policy will be facilitated by Guidance Tamil Nadu, the State’s investment promotion agency.

The State Industries Promotion Corporation of Tamil Nadu Ltd. (SIPCOT) will handle the disbursement of incentives. A single window portal, to be run by the Guidance, will streamline clearance, licence, and approval.

Tamil Nadu is home to leading companies in semiconductor design. It has attracted global semiconductor design companies and electronics manufacturers here to establish research and development and global capability centres. The State has over 100 academic institutions offering courses in very large-scale integration (VLSI), electronics design, nanotechnology, etc., which support the talent pool needed for the semiconductor industry.

A highly skilled talent pool is available to man the shop floors, with about 1,13,000 youths passing out of diploma and polytechnic institutions every year.

Four hundred and ninety-four Industrial Training Institutes (ITIs) offer 700 courses, forming the backbone of electronics manufacturing in the State.