Uttar Pradesh Semiconductor Policy, 2024: Key features, incentives

The policy seeks to attract projects across semiconductor fabrication, compound semiconductors, silicon photonics, sensors, discrete semiconductors and assembly, testing, marking and packaging

POLICY AT A GLANCE

Item	Position
Official title	Uttar Pradesh Semiconductor Policy, 2024
Notification date	February 12, 2024
Administrative department	Department of Information Technology and Electronics
Nodal agency	Uttar Pradesh Electronics Corporation Limited
Policy validity	Five years from notification, subject to amendment or replacement
Principal beneficiaries	Semiconductor fabrication units, compound semiconductor and silicon photonics facilities, sensor and discrete semiconductor fabs, and semiconductor packaging and testing units
Main capital support	State subsidy equal to 50 per cent of the capital subsidy approved by the Union government
Other support	Interest subsidy, land rebate, stamp-duty exemption, electricity-duty relief, transmission concessions, research support, patent reimbursement, skilling and worker housing support
Application dependency	Union government approval is central to the principal capital-subsidy route
Current status	Policy notified and institutional framework established; project-level approval and commissioning data remain limited

 

The policy forms part of Uttar Pradesh’s wider electronics-manufacturing strategy. It seeks to attract projects across semiconductor fabrication, compound semiconductors, silicon photonics, sensors, discrete semiconductors and assembly, testing, marking and packaging operations.

 

What is the Uttar Pradesh Semiconductor Policy?

The policy is a state incentive framework for semiconductor manufacturing and related activities. Semiconductors are materials used to make chips and electronic devices that control electrical signals in products such as mobile phones, computers, vehicles, industrial machinery and communication equipment.

 

The policy covers several distinct parts of the semiconductor value chain:

• Semiconductor fabrication plants;
• Compound semiconductor facilities;
• Silicon photonics facilities;
• Sensor fabrication units;
• Discrete semiconductor fabrication;
• Semiconductor Assembly, Testing, Marking and Packaging units;
• Outsourced Semiconductor Assembly and Test facilities;
• Research and development centres;
• Training, skilling and supporting infrastructure.

Assembly, Testing, Marking and Packaging, commonly abbreviated as ATMP, and Outsourced Semiconductor Assembly and Test, commonly abbreviated as OSAT, refer to downstream operations in which fabricated semiconductor wafers or dies are assembled, packaged and tested before use in electronic products. These facilities are different from wafer fabrication plants, which manufacture the semiconductor devices themselves.

 

Why was the policy introduced?

India has historically depended substantially on imported semiconductor chips and manufacturing capacity. The Union government’s India Semiconductor Mission seeks to develop domestic fabrication, packaging, design and supporting infrastructure through central fiscal assistance.

 

Uttar Pradesh introduced its policy to compete for projects approved under these Union government schemes. The state already has a large electronics-manufacturing base, particularly in Noida, Greater Noida and the Yamuna Expressway region, and seeks to extend that base into semiconductor production and packaging.

 

The policy also recognises that semiconductor projects require unusually high capital investment, uninterrupted electricity, large quantities of treated water, clean-room infrastructure, specialised skills and long construction and qualification periods. State support is intended to reduce some of these location-specific costs.

 

What are the main objectives?

The policy seeks to:

• Attract semiconductor fabrication and packaging investment;
• Supplement Union government fiscal assistance;
• Build a semiconductor ecosystem around Uttar Pradesh’s electronics-manufacturing base;
• Promote compound semiconductors, silicon photonics, sensors and discrete semiconductors;
• Encourage research, innovation and product development;
• Support semiconductor skills and specialised training;
• Create domestic and international patentable technologies;
• Develop common research and testing facilities;
• Facilitate reliable power, land and industrial infrastructure;
• Generate skilled employment.

These are policy objectives. They should not be treated as evidence that semiconductor capacity or employment has already been created under the policy.

 

Who is eligible?

The policy is primarily intended for projects approved or eligible under the corresponding Union government semiconductor schemes.

 

Eligible categories broadly include:

• Semiconductor fabrication plants;
• Display fabrication projects where covered by the applicable Union government framework;
• Compound semiconductor facilities;
• Silicon photonics facilities;
• Sensor fabrication plants, including Micro-Electro-Mechanical Systems;
• Discrete semiconductor fabrication;
• ATMP units;
• OSAT units;
• Integrated projects combining fabrication and packaging;
• Eligible research and development centres;
• Centres of Excellence and training institutions.

The Union government’s semiconductor-fabrication scheme applies to new units as well as qualifying expansion, modernisation or diversification projects. It provides central support subject to technical and financial appraisal, approval by the competent authority and execution of a fiscal-support agreement.

 

For compound semiconductors and packaging projects, the Union government framework similarly covers new projects and qualifying expansion or diversification. The project must meet the applicable investment threshold and technical conditions under the Union scheme.

 

A conventional electronics-assembly unit does not qualify merely because it uses semiconductor components. The project must fall within an eligible semiconductor-manufacturing, packaging or associated category.

 

What financial incentives are available?

State capital subsidy

The principal state incentive is an additional capital subsidy equal to 50 per cent of the capital subsidy approved by the Government of India.

 

This means the Uttar Pradesh subsidy is calculated with reference to the Union government’s approved support, not automatically as 50 per cent of the project’s total investment.

 

For example, the Union government’s modified semiconductor-fabrication scheme provides fiscal support equal to 50 per cent of eligible project cost. Uttar Pradesh’s policy can provide an additional state subsidy equal to 50 per cent of that approved Union subsidy, subject to the state policy, approval letter and overall admissibility.

 

The Union scheme for compound semiconductors, silicon photonics, sensors, discrete semiconductors and ATMP or OSAT facilities provides 50 per cent of eligible capital expenditure. The state’s support is again linked to the capital subsidy approved under the applicable Union scheme.

 

Applicants should not interpret “50 per cent additional subsidy” as permission to claim 50 per cent of every item of project expenditure. The eligible base, approval period, technology scope and disbursement schedule are governed by the Union approval and state sanction.

 

Interest subsidy

Eligible projects with investment of up to Rs 200 crore may receive an interest subsidy of 5 per cent a year.

 

The official state summary specifies a maximum benefit of Rs 1 crore per unit each year for seven years, giving a maximum potential interest subsidy of Rs 7 crore.

 

The subsidy is expected to apply to eligible term-loan interest actually paid. The applicant must verify the admissible loan, lender, repayment period and claim documents from the implementation guidelines.

 

Land rebate

The policy provides substantial land support for selected project categories.

 

For compound semiconductors, silicon photonics, sensor fabs, discrete semiconductor projects and ATMP or OSAT facilities, the official summary specifies a 75 per cent rebate on the first 200 acres and a 30 per cent rebate on additional eligible land.

 

The policy material should be consulted for the treatment of semiconductor fabrication projects and for the land-owning agencies through which the concession is available. A project purchasing private land independently should not assume that the same rebate will apply.

 

Stamp duty and registration fees

Eligible projects may receive a 100 per cent exemption from stamp duty and registration fees on the purchase or lease of qualifying land.

 

The exemption remains subject to approval and the operative government order. Applicants should obtain the necessary certificate before executing the transaction.

 

Electricity-duty and grid support

The policy provides a 100 per cent electricity-duty exemption for ten years and refers to dual-grid power infrastructure for qualifying units.

 

Electricity-duty exemption does not mean free electricity. The unit remains responsible for energy tariffs, demand charges and other non-exempt charges.

 

Transmission and wheeling concessions

The policy provides a 50 per cent exemption from specified intra-state power-purchase, transmission and wheeling charges for 25 years.

 

The actual benefit depends on the project’s power-sourcing structure, applicable open-access regulations and orders of the relevant electricity authorities.

 

What research, innovation and workforce support is available?

An eligible standalone research and development centre may receive reimbursement equal to 25 per cent of approved project cost, capped at Rs 10 crore.

 

A qualifying Centre of Excellence may receive reimbursement of 50 per cent of project cost, also capped at Rs 10 crore. These centres may support semiconductor research, testing, training, design and industry-academic collaboration.

 

Patent-registration assistance is available up to:

• Rs 10 lakh for a domestic patent;
• Rs 20 lakh for an international patent.

 

The policy also provides for skilling and training support and assistance equal to 10 per cent of eligible worker or industrial-housing costs. The detailed ceilings and eligibility conditions should be confirmed from the implementation guidelines.

 

How can an applicant access the benefits?

Uttar Pradesh Electronics Corporation Limited is the state nodal agency. The project must ordinarily be coordinated with the Union government’s India Semiconductor Mission where the state capital subsidy is linked to Union approval.

 

The broad process is:

• Prepare the technical and financial project proposal.
• Apply under the relevant Union government semiconductor scheme.
• Obtain acknowledgement and undergo technical and financial appraisal.
• Secure Union government approval and an approval letter.
• Apply to the Uttar Pradesh nodal agency for the corresponding state package.
• Obtain state approval or a Letter of Comfort.
• Finalise land, power, water and statutory clearances.
• Construct the project and achieve the prescribed milestones.
• Submit audited expenditure and compliance records.
• Claim Union and state assistance under their respective procedures.

Acknowledgement of a Union government application is not equivalent to project approval. The Union guidelines expressly distinguish between acknowledgement, approval and commercial production.

 

Implementation and progress so far

The policy has been notified, and Uttar Pradesh Electronics Corporation Limited and Invest UP maintain dedicated semiconductor-policy pages. The state has also published promotional and sectoral material describing its electronics base, infrastructure and policy incentives.

 

However, consolidated official data were not identified on:

• Applications submitted to the state;
• Union-approved projects located in Uttar Pradesh;
• Letters of Comfort issued;
• Land allotted under the policy;
• State capital subsidy sanctioned;
• Fabrication or packaging capacity commissioned;
• Commercial production begun;
• State incentives disbursed;
• Employment generated specifically under the policy.

Expressions of interest, investment proposals or discussions with semiconductor companies should not be presented as approved or operational projects.

 

How does the policy support Uttar Pradesh’s wider economic strategy?

The policy complements the Uttar Pradesh Electronics Manufacturing Policy, the Electronics Component Manufacturing Policy and the state’s data-centre and information-technology frameworks.

 

A semiconductor project can support downstream industries including mobile phones, consumer electronics, vehicles, telecommunications, defence equipment, medical devices and industrial machinery. However, each policy has separate eligibility conditions, and support for the same expenditure cannot be assumed under multiple state schemes.

 

Key challenges and limitations

• Dependence on Union approval: The main state capital subsidy is linked directly to the subsidy approved by the Government of India.

• High infrastructure requirements: Semiconductor plants require uninterrupted power, high-quality water, waste treatment, clean rooms and specialist utilities.

• Long development cycle: Fabrication projects may take several years before commercial production.

• Technology and market risk: Semiconductor technology changes rapidly, while global demand can be cyclical.

• Specialised workforce: Uttar Pradesh must develop advanced engineering, fabrication, process-control and equipment-maintenance skills.

• Limited implementation disclosure: Official project-level approvals and disbursements remain insufficiently consolidated.

 

What businesses should keep in mind

Applicants should verify:

• The correct project category;
• Eligibility under the applicable Union government scheme;
• The Union-approved project cost or capital expenditure;
• The calculation of the state’s 50 per cent additional subsidy;
• Land-rebate eligibility;
• Power and water availability;
• Electricity and transmission concessions;
• Project milestones and commercial-production deadlines;
• Environmental and hazardous-material approvals;
• Research, patent and training claim conditions;
• Restrictions on duplicate subsidies.

Eligibility and benefits remain subject to the notified policy, subsequent amendments, applicable Union and state government guidelines and approval by the competent authorities.

 

FAQs

What is the main purpose of the policy?

It seeks to attract semiconductor fabrication, packaging, testing, research and related investment to Uttar Pradesh.

 

What is the principal capital subsidy?

The state may provide an additional subsidy equal to 50 per cent of the capital subsidy approved by the Government of India.

 

Does this mean the state pays 50 per cent of total project cost?

No. The state subsidy is linked to the Union-approved subsidy, not automatically to the project’s total cost.

 

Which semiconductor projects are covered?

The policy covers fabrication, compound semiconductors, silicon photonics, sensors, discrete semiconductors, ATMP, OSAT and eligible research facilities.

 

What land support is available?

Selected non-silicon fabrication and packaging categories may receive a 75 per cent rebate on the first 200 acres and 30 per cent on additional land.

 

Which agency implements the policy?

Uttar Pradesh Electronics Corporation Limited is the state nodal agency.

 

How long is the policy valid?

It is valid for five years from notification, subject to amendment or replacement.

 

Conclusion

The Uttar Pradesh Semiconductor Policy, 2024 is designed to supplement the India Semiconductor Mission through additional state capital support, land concessions, power-related relief and research incentives.

 

Its central advantage is the 50 per cent state top-up on the capital subsidy approved by the Union government. Its practical effect, however, depends on projects first satisfying the stringent technical, financial and approval requirements of the relevant Union scheme. Project approvals, financial closure, construction, commissioned capacity and subsidy disbursement will be the main indicators of implementation.

 

Sources

• Uttar Pradesh Semiconductor Policy, 2024, Department of Information Technology and Electronics, Government of Uttar Pradesh; February 12, 2024.
• Uttar Pradesh Semiconductor Policy, 2024 — official policy and incentive page, Invest UP, Government of Uttar Pradesh.
• Uttar Pradesh Semiconductor Policy, Uttar Pradesh Electronics Corporation Limited, Government of Uttar Pradesh.
• Guidelines for the Modified Scheme for setting up Semiconductor Fabs in India, Ministry of Electronics and Information Technology, Government of India; May 29, 2023.
• Revised Guidelines for the Modified Scheme for Compound Semiconductors, Silicon Photonics, Sensors, Discrete Semiconductors and ATMP/OSAT facilities, Ministry of Electronics and Information Technology, Government of India; June 30, 2023.