UP Cabinet Approves New Incentives to Attract Large Semiconductor Projects

The Uttar Pradesh Cabinet has approved a new incentive package for semiconductor projects with investments of ₹3,000 crore or more, offering subsidies, tax relief, and workforce support to attract global chipmakers.

The Uttar Pradesh Cabinet’s decision on semiconductor incentives was formally briefed to the press by Finance and Parliamentary Affairs Minister Suresh Khanna after the Cabinet meeting chaired by CM Yogi Adityanath. Multiple outlets have carried the government’s press note and ministerial briefing.

India TV News reported that the Yogi government has decided to offer special incentives under the Semiconductor Policy 2024, including 10-year SGST exemptions, interest subsidies, and employee cost reimbursements. Khanna confirmed that 13 of 14 proposals were approved in the Cabinet meeting. 

Key Highlights of the Incentive Package

• Minimum Investment Threshold: Companies must invest at least ₹3,000 crore to qualify.
• Tax & Duty Relief:
  • 10-year GST exemptions
  • Stamp duty relief on land purchases
• Financial Subsidies:
  • Interest subsidies on loans
  • Power tariff support to reduce operational costs
• Workforce & R&D Support:
  • Employee cost reimbursements to encourage local hiring
  • Incentives linked to R&D and skill development

Why This Matters

• Boost to High-End Manufacturing: Positions Uttar Pradesh as a hub for semiconductor fabrication.
• Job Creation: Large-scale employment expected in Varanasi, Noida, and Greater Noida.
• Competitive Edge: Competes with Gujarat and Tamil Nadu through long-term tax exemptions and workforce incentives.

Challenges & Risks

• Global Competition: India is competing with Taiwan, South Korea, and the U.S.
• Capital Intensive Industry: Requires billions in upfront investment and stable supply chains.
• Execution Risk: Policy clarity and speed of approvals are critical.

Strategic Implications

• For Investors: Attractive package, but infrastructure readiness is key.
• For India’s Semiconductor Mission: Strengthens self-reliance in chip manufacturing.
• For Local Economy: Could transform UP into a semiconductor corridor.

Comparison with Other States

State	Minimum Investment	Key Incentives	Focus Areas
Uttar Pradesh	₹3,000 crore	GST exemption (10 yrs), interest subsidy, power tariff relief, employee cost support	Varanasi, Noida, Greater Noida
Gujarat	₹1,000 crore	Capital subsidy, land at concessional rates, infrastructure support	Dholera SIR
Tamil Nadu	₹1,500 crore	Stamp duty exemption, training subsidies, electricity tariff concessions	Chennai, Hosur
Karnataka	₹2,000 crore	R&D incentives, skill development grants, tax rebates	Bengaluru