TN announces semiconductor scheme; offers up to 25% subsidy

CHENNAI: The State government has introduced the Tamil Nadu Semiconductor Ecosystem Scheme 2026, offering incentives to attract investments in semiconductor manufacturing, equipment, materials, advanced packaging and testing facilities.

The scheme document was launched by the Chief Minister C Joseph Vijay at the Secretariat on Thursday. It provides two tracks of incentives based on the Union government's Semicon 2.0 programme.

Under track 1, projects approved by the Union government will receive additional incentives from the State. The investment promotion subsidy will range from 15 to 25% of eligible capital expenditure approved by the Centre, depending on the project category.

Projects involving 300-mm silicon semiconductor wafer fabrication will be eligible for State support of 25% of the eligible capital expenditure, in addition to the Centre's 40% assistance. Advanced packaging projects will also receive 25% State support, while legacy packaging projects will be eligible for 20%.

The State will provide a 15% subsidy for semiconductor-grade raw materials, testing and characterisation facilities, and research and development facilities for semiconductor equipment. Manufacturing, assembling or refurbishing semiconductor equipment and components will also qualify for 15% State support, subject to the scheme's conditions.

Track 2 covers projects that have not applied for assistance under Semicon 2.0 or have applied but have not been selected.

Projects can receive fixed capital subsidies of 15 to 25% of eligible fixed assets and turnover-based subsidies of up to 2% annually for five years, depending on the category.

The minimum investment requirement ranges from Rs 50 crore, for certain semiconductor materials and packaging-related products, to Rs 500 crore for advanced packaging projects.

Additional benefits include training assistance of Rs 10,000 per person per month, payroll subsidies, land cost concessions, stamp duty exemption and electricity tax exemption for five years. Eligible projects can also receive a 5% interest subsidy on term loans for six years.

Companies must ensure that at least 50% of their direct workforce comprises Tamil Nadu residents and at least 60% of high-value jobs, defined as positions with basic wages exceeding Rs 25,000 a month, must also be filled by State residents. The proposals should be submitted to Guidance Tamil Nadu on or before September 30, 2027.