The Madhya Pradesh government has approved a forward-thinking semiconductor policy aimed at strengthening chip design and manufacturing in the state. The policy, approved by the State Cabinet, offers several financial incentives, including capital and interest subsidies, land at reduced rates, and lowered electricity tariffs, all aimed at stimulating investment in semiconductor fabrication and design units. With the growing demand for semiconductor components across industries like electronics, automotive, and information technology, Madhya Pradesh is strategically positioning itself as an attractive destination for semiconductor businesses.

Financial Incentives & Subsidies

To attract semiconductor manufacturers, the policy offers a capital investment subsidy covering up to 25 per cent of the total project cost or 50 per cent of the subsidy provided by the Government of India, whichever is lower. For projects that do not receive central government assistance, the state will provide a subsidy of up to 40 per cent, with a maximum cap of Rs 150 crore. Additionally, eligible enterprises can benefit from an interest subsidy of 6 per cent or the prevailing interest rate (whichever is lower) for up to five years, with a maximum limit of Rs 10 crore. To further reduce operational costs, semiconductor firms will be able to purchase land at subsidised rates and avail themselves of an electricity tariff concession of Rs 2 per unit for the first ten years.

Customised Incentives for Large Investments

Projects with an investment exceeding Rs 400 crore will be eligible for tailored incentive packages, including additional infrastructure support, tax benefits, and financial incentives. The policy also encourages public-private partnerships and collaborations between government bodies, academic institutions, and private enterprises to foster innovation and technological advancements. Furthermore, the Madhya Pradesh government is keen on attracting foreign direct investment (FDI) to bring global expertise to the state’s semiconductor ecosystem.

Focus on R&D and Regulatory Ease

Recognising the importance of research and development in semiconductor technologies, the government has allocated special funds and programs to support R&D initiatives. The state is also working to streamline regulatory procedures to ensure quick approvals and a hassle-free business environment for semiconductor companies.

Key Policies Announced Ahead of Global Investor Summit

In a strategic move ahead of the Global Investor Summit (GIS), scheduled for February 24-25, 2025, in Bhopal, the Madhya Pradesh Cabinet has sanctioned multiple industry-friendly policies, including those focused on semiconductors and drones. Following his recent visit to Japan, Chief Minister Mohan Yadav highlighted ongoing discussions with Japanese investors regarding partnerships in metro rail technology, smart transportation, urban planning, water, and waste management for cities like Bhopal and Indore.

Madhya Pradesh’s Vision for Semiconductor Industry

Briefing the media, Cabinet Minister Kailash Vijayvargiya emphasised that the new semiconductor policy would play a crucial role in the state’s long-term industrial growth. He stated that this initiative would position Madhya Pradesh as a global contender in the semiconductor industry while fostering local economic development and innovation in chip design and manufacturing.