Gujarat announces ‘Semiconductor Policy’ with heavy subsidies

BL Ahmedabad Bureau | | Updated on: Jul 27, 2022
Policy aims to make Gujarat a pioneering state in developing Electronics System Design & Manufacturing (ESDM) ecosystem

Policy aims to make Gujarat a pioneering state in developing Electronics System Design & Manufacturing (ESDM) ecosystem

Policy aims to generate 2 lakh jobs during the operative period of five years

The Gujarat government on Wednesday announced heavy subsidies on power, land and water tariffs for entrepreneurs interested in investing in semiconductor or display fabrication manufacturing in the State.

Chief Minister Bhupendra Patel unveiled the 'Gujarat Semiconductor Policy 2022-27' with the objective to make Gujarat a pioneer State in developing Electronics System Design & Manufacturing (ESDM) ecosystem. The policy will facilitate effective and timely execution of the eligible projects for setting up a robust semiconductor and display fabrication ecosystem.

First State with dedicated policy

The India Semiconductor Mission (ISM) announced by the Centre, already has four policies providing support to semiconductor and display fabrication projects. The Gujarat policy focuses on guiding a significant portion of investments made under these ISM policies towards the State.

"Gujarat has become the first State to launch a dedicated policy for semiconductors and display manufacturing. The policy aims to generate about two lakh jobs in the next five years," Patel said in a statement.

A 'Semicon city' will be developed in the Dholera Special Investment Region (SIR), for a dedicated manufacturing hub of semiconductors and display fab sector.

Under the Gujarat Semiconductor Policy 2022-27, Gujarat will provide an additional capital assistance at 40 per cent of the capex assistance extended by the Centre for the projects approved under the ISM. Initially, one project each from semiconductor, and display fabrication will get support. In case of multiple applications, the State-appointed high-powered committee will make recommendations on the projects worthy of getting capital support from the State. However, the projects approved under the Design-linked Incentive scheme of the Government of India will not be eligible for availing the benefits under the new policy.

Gujarat has become the first State to launch a dedicated policy for semiconductors and display manufacturing

Gujarat has become the first State to launch a dedicated policy for semiconductors and display manufacturing

Subsidy on power, land costs

Eligible projects will get a 75 per cent subsidy on procurement of first 200 acres of land in the SIR, while additional land for upstream or downstream projects will get a 50 per cent subsidy on land cost. One-time reimbursement of 100 per cent stamp-duty and registration fees paid to the government, fixed water tariff at ₹ 12 per cubic meter for five years, and a capital subsidy of 50 per cent for desalination plant are the fiscal benefits under the new policy.

The policy offers power tariff subsidy of ₹ 2 per unit for 10 years, while a project with significant foreign direct investment (FDI) component can avail a higher level of electricity subsidy. There is exemption from electricity duty for all projects.

Besides the capital incentives, the policy assures enhanced ease of doing business with a single window clearance mechanism, facilitation on effluent/ hazardous waste management, uninterrupted power and water supply besides geographic, logistical and social incentives in terms of proximity to ports, airports, industrial corridors, and availability of skilled workforce.

Published on July 27, 2022
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