Uttar Pradesh Semiconductor Policy 2024 (50% additional state top-up on India Semiconductor Mission; 75% effective capex coverage)

Mechanism

The UP Semiconductor Policy 2024 is an explicit stack-on-top instrument: units must first be approved under one of the central ISM schemes (the Modified Scheme for Setting up Semiconductor Fabs, the Modified Scheme for Setting up Display Fabs, the Modified Scheme for Compound Semiconductors / Silicon Photonics / Sensors Fab / Discrete Semiconductors / ATMP/OSAT, or the Design Linked Incentive). For any such ISM-approved unit physically located in Uttar Pradesh, the state provides:

• Capital subsidy: 50% of whatever ISM has approved (the central

scheme pays up to 50% of project cost, so the combined federal+state envelope reaches ~75% of project capex).

• Land rebate: 75% on the first 200 acres for ATMP / OSAT facilities,

30% on additional acreage; dual power-grid reimbursement for fabs (state pays for the lower-cost grid).

• Interest subsidy: 5% p.a., capped at ₹1 cr per unit per year, for

7 years, on loan-financed investment up to ₹200 cr.

• Tax exemptions: 100% stamp duty and registration-fee waiver on

land purchase/lease; 100% electricity-duty exemption for 10 years.

The policy is implemented through Invest UP (the state investment-promotion agency) and the U.P. Electronics Corporation Limited.

Downstream implications

• Federal–state ISM stack reaches saturation. With UP, four of the

five most industrially active Indian states (TN, KA, GJ, UP) now offer a 50% stacked top-up on ISM. The effective ~75% capex coverage is among the most generous in the world for chip ATMP/OSAT, exceeding the headline US CHIPS Act 25% ITC plus direct grants when combined.

• UP captured ₹40,038 cr in commitments within 12 months — large

share concentrated in Tarq Semiconductor's ₹28,440 cr proposal and Kaynes Semicon's ₹4,248 cr proposal, both at Jewar (the Noida International Airport semi cluster). UP's pull is geographic: proximity to the planned Jewar airport and to the Delhi-NCR talent pool.

• Mega-project incentive layer. The state cabinet subsequently

approved a discretionary mega-incentive envelope for individual investments ≥ ₹3,000 cr, on top of the published policy. This brings UP closer to Gujarat's customised-incentive practice for Tata-PSMC Dholera and Micron Sanand.

Open questions

• Whether disbursement keeps pace with announced commitments — Tarq is a

new entrant and the proposal scale is unusual relative to its capacity.

• Interaction with the Apr 2025 central Electronics Components

Manufacturing Scheme (ECMS): UP has not yet published a state ECMS-stack instrument analogous to Gujarat's GECMP-2025.