Tamil Nadu Semiconductor and Advanced Electronics Policy 2024 (50% state top-up of India Semiconductor Mission)

Mechanism

This is the first sub-national (state-level) industrial-policy notification entered into the IPTM register for India. The 2024 Tamil Nadu policy is structurally distinct from — and operationally additive to — the central Government of India semiconductor stack:

1. 50% state top-up of central ISM incentive — for any unit approved under the central India Semiconductor Mission schemes (semiconductor fab / display fab / compound-semiconductor / sensor / silicon photonics / discrete semiconductor / ATMP), Tamil Nadu pays an additional state subsidy equal to 50% of the central incentive. This materially changes the post-incentive effective cost of capital for any anchor investor choosing Tamil Nadu over a competing state. 2. Standalone state incentives — capital subsidy, training subsidy, product testing & prototyping support, land cost concessions, stamp duty refund, electricity tax exemption, quality-certification support, IP-related support, and interest subsidy. These apply even to units that are not central-scheme approved, broadening the addressable investor base beyond ISM-tier anchors. 3. Eligibility thresholds — minimum investment ₹200 crore plus minimum employment of 150 jobs for the initial ₹200 crore tranche. 4. Validity — three years from the date of notification (i.e. the policy window runs 7 January 2024 → 6 January 2027 absent extension). 5. Implementing agency — Guidance Tamil Nadu, the state's investment-promotion / single-window agency, runs the application, approval, and disbursal pipeline.

The policy is the third state-level dedicated semiconductor policy in India (after Gujarat 2022 and Karnataka), and is the most fiscally aggressive of the three because of the explicit 50%-top-up structure. It sits underneath but is operationally additive to the central instruments already in the register: 2021-12-15-india-semiconductor-mission-pli (parent ISM scheme), 2026-02-01-india-semiconductor-mission-2-0 (ISM 2.0 expansion), and 2026-04-09-india-dholera-sez-tata-semiconductor-notification (Tata fab SEZ notification — Dholera is in Gujarat, not Tamil Nadu, but the structural parallel is identical: state-level layering on a central scheme).

Downstream implications

• Tata Electronics ATMP Hosur — the Tata Semiconductor Assembly & Test

facility under construction at Hosur, Tamil Nadu, is the most visible beneficiary: any central-ISM-approved unit there qualifies for an additional 50% state top-up on top of the central ISM incentive.

• Lam Research Tamil Nadu R&D — Lam's announced Tamil Nadu engineering /

R&D presence sits within the policy's qualifying scope for state-level capex and training support.

• Precedent for Karnataka / Maharashtra / Andhra Pradesh — the 50% top-up

template is likely to be replicated by competing state governments seeking to anchor next-wave semiconductor investments; expect parallel state-level policies to enter the register through 2026-2027.

• Tamil Nadu electronics-export target — the policy is aligned to the

state's stated 40%-share-of-national-electronics-exports goal; the state is already India's largest electronics exporter by volume.

Open questions

• Has any unit been approved for the 50%-state top-up to date, and what is

the cumulative state outlay disbursed under the policy?

• Will the policy be extended past its three-year validity (expiring January

2027), and on what terms?

• Do Karnataka and Maharashtra match the 50%-top-up structure in their next

state-level semiconductor notifications, or do they undercut on a different margin (land, power, water)?