Gujarat becomes India’s first state to implement dedicated semiconductor policy

The Gujarat government, led by Chief Minister Bhupendra Patel, has launched the country's first 'Gujarat Semiconductor Policy 2022-2027'.

The development aligns with PM Modi's vision for a viksit Bharat@2047.

The policy is designed to bolster the state’s role as a leader in semiconductor production and self-reliance.

To facilitate the policy's implementation, the state government established the 'Gujarat State Electronics Mission,' a dedicated institution aimed at advancing the state's leadership in semiconductor self-reliance.

Key projects under the policy

Under CM Patel's leadership, the foundation stone for Micron's advanced semiconductor ATMP plant was laid in Sanand, marking an investment of over Rs 22,500 crore.

In Dholera, known as ‘Semicon City’, Tata Electronics Private Limited (TEPL) and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) are collaborating to build India’s first AI-enabled semiconductor fabrication plant, an investment exceeding Rs 91,000 crore.

Additionally, CG Power and Renesas have committed to setting up a state-of-the-art Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand with a project investment of over Rs 7,500 crore.

Supportive infrastructure and investments

The Gujarat government has approved another major project: Kaynes Semicon’s facility in Sanand, which is projected to produce approximately 6 million chips daily with an investment of Rs 3,300 crore.

Collectively, these investments signal a substantial boost in high-skilled employment opportunities, with about 53,000 jobs expected to be created across the state.

The state government has shown consistent support for semiconductor industry growth, complementing the financial assistance provided by the central government with an additional 40% subsidy for capital expenditure.

Incentives for the semiconductor sector

Gujarat's semiconductor policy is rich with incentives designed to attract and support semiconductor companies. Businesses will benefit from a 100% one-time refund on stamp duty and registration fees, a Rs 2 per unit subsidy on electricity at competitive rates, and a Rs 12 per cubic metre rate for water.

Moreover, semiconductor units setting up in Dholera can avail up to a 75% subsidy on land acquisition. Dholera, envisioned as a premier ‘Semicon City’, is also being developed as India’s first Greenfield Smart City, equipped to support both industries and residents with advanced infrastructure.

Broader impact and national context

The cumulative commitment from the four major semiconductor projects in Gujarat totals Rs 1.24 lakh crore. This strategic push is expected to make a significant impact on reducing India’s dependence on semiconductor imports, thereby contributing to self-reliance.

Notably, it aligns with the central government’s ‘India Semiconductor Mission’, launched in 2021 with a budget of Rs 76,000 crore to support domestic semiconductor manufacturing.

India’s semiconductor market, which was valued at $15 billion in 2020, is projected to surpass $63 billion by 2026.