Mechanism
The Rajasthan Semiconductor Policy 2026 is a state-level industrial-policy instrument that layers matching incentives on top of the central-government India Semiconductor Mission (ISM) + ISM 2.0 architecture. Cabinet approved it on 21 January 2026 alongside the Rajasthan Aerospace & Defence Policy 2026, marking the state's first sectoral semiconductor framework.
Investment classification tiering — projects are classified into large, mega, and ultra-mega categories, with ISM-aligned subsidy thresholds calibrated to fab, ATMP, compound-semiconductor, display-fab, sensor / power-electronics investment sizes.
Top-up architecture — the policy's headline mechanism is a 60% matching top-up on the capital subsidy received under ISM (which itself provides up to 50% capex subsidy for fabs). This creates a combined capex-subsidy stack of potentially 30% of project cost from the state alone on top of the national 50%. Peer states using the same top-up architecture: Tamil Nadu Semiconductor Policy 2024 (25%), UP Semiconductor Policy 2024 (50%), Gujarat GECMP-2025.
Incentive menu:
- 60% of the ISM-granted capital subsidy, matching central-scheme disbursements
- 5% interest subsidy on term loans (multiple years)
- 100% exemption of electricity duty for 7 years
- 75% exemption of stamp duty and land conversion charges
- Flexible land payment options
- SGST refund (substantial portion of state GST on inputs)
- Lease-rental subsidy for office/clean-room space
Sectoral scope — fab, ATMP, OSAT, compound semiconductors (SiC, GaN), display fabs, power electronics, sensors, PCBs, fabless design, IP/EDA.
Anchor cluster — the Khushkhera-Bhiwadi-Neemrana Investment Region (KBNIR) is the primary RIICO industrial-corridor anchor for semiconductor-cluster development, reinforced by Foxconn's existing Bhiwadi/Neemrana FY2026 manufacturing expansion and Continental Automotive's Jaipur sensor + ECU operations.
Downstream implications
- Completes the India sub-national semiconductor-policy lattice — with Rajasthan filed, the 6 largest semiconductor-targeting Indian state policies are captured (UP/TN/GJ/RJ/KA/MH), providing a complete state-incentive matrix for fab and ATMP location decisions
- ISM 2.0 capex-pull amplification — Rajasthan's top-up materially widens the locational option set for next-wave fab/ATMP investors (Tata, Micron, CG Power-Renesas, Tower Semiconductor partnerships, Lam Research, Applied Materials considering Indian sites)
- Compound-semiconductor positioning — explicit SiC/GaN inclusion positions the state to capture EV-power-module and 5G-RF-chip ATMP investment at a time when India lacks SiC wafer fab capacity; creates competitive tension with Gujarat's SiC-cluster ambitions under GECMP-2025
- KBNIR corridor catalysis — the policy operationalises KBNIR as a semiconductor-grade industrial zone distinct from Rajasthan's legacy auto/pharma corridors; proximate to the NCR logistics belt and existing Foxconn + Continental operations
Open questions
- Whether the Rajasthan government will pursue formal Defence-Industrial-Corridor (DIC) node designation (which would further amplify dual-use compound-semiconductor investments)
- Timeline and quantum for first ISM-aligned disbursements under the 60% top-up
- Whether the fabless design ecosystem incentives (IP/EDA reimbursement) will attract chip-design startups currently concentrated in Bengaluru/Hyderabad/Chennai