Odisha offers 25% additional capex support for ISM-backed chip projects

The amended policy extends incentives to semiconductor equipment, chemicals, specialised gases, advanced materials and other critical supply-chain components

In a major amendment to the Semiconductor Manufacturing and Fabless Policy, the Odisha Cabinet, chaired by Chief Minister Mohan Charan Majhi, on Wednesday decided to provide additional fiscal support of 25 per cent of eligible capital expenditure (capex) for projects approved by the India Semiconductor Mission (ISM).

 

This support will be disbursed on a pari passu basis with the Government of India’s fiscal assistance, aligned with project milestones and corresponding releases approved by the ISM.

 

The state Cabinet approved the amendment, opening the door to investments not only in semiconductor manufacturing but also in semiconductor equipment, semiconductor-grade chemicals, specialised gases, advanced materials and other critical supply-chain components. These activities will now be supported alongside semiconductor manufacturing, assembly, testing, marking and packaging/outsourced semiconductor assembly and test (ATMP/OSAT), display manufacturing and fabless design.

   

Odisha has substantially strengthened its semiconductor investment proposition by enabling customised incentive packages for mega projects in semiconductor equipment, input supply chains and raw materials, subject to state Cabinet approval on the recommendation of a high-level committee headed by the chief secretary.

 

The expanded package is designed to make Odisha a more compelling destination for companies looking to establish not just semiconductor manufacturing facilities but also the wider ecosystem that supports them.

 

The state is seeking to create an integrated industrial base around the semiconductor sector by bringing equipment makers, specialised input manufacturers, advanced-material producers and supply-chain companies into the policy framework.

 

The Odisha Semiconductor Manufacturing and Fabless Policy was originally notified in September 2023 and subsequently amended in March 2024 and July 2025. It has already attracted proposals from five companies, with two projects securing support under the India Semiconductor Mission.

 

The latest amendment marks a significant expansion in the state’s semiconductor strategy. While the earlier policy provided support for semiconductor manufacturing, ATMP/OSAT, display manufacturing and fabless design, the revised framework will cover several critical upstream and supply-chain activities within its ambit.

 

In alignment with ISM 2.0, this amendment aims to enhance the policy’s attractiveness, strengthen investor confidence and build a resilient semiconductor ecosystem in Odisha. It seeks to promote investment, reduce import dependence in line with Atmanirbhar Bharat and position the state as a preferred destination for semiconductor manufacturing and innovation while generating high-value employment.

 

The measures proposed in the amended policy will also catalyse skill development and promote the growth of supporting micro, small and medium enterprises (MSMEs), creating a strong multiplier effect across the industrial ecosystem. With the inclusion of critical value-chain segments, Odisha will transition from a project-driven approach to a more integrated semiconductor ecosystem encompassing manufacturing, supply chains, materials and enabling infrastructure.

 

Anu Garg, chief secretary, said the amendment gives the state flexibility to structure an investment proposition for large projects in critical segments where standard incentives may not adequately address the scale or requirements of the investment.

 

“The government expects the expanded semiconductor ecosystem will generate employment well beyond the core manufacturing facilities. The measures are expected to create direct and indirect employment across semiconductor manufacturing, advanced materials, logistics and ancillary sectors,” she added.