Tamil Nadu Semiconductor Scheme 2026: Up to 25% Investment Subsidy for Companies

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

Chief Minister C. Joseph Vijay launched the scheme document at the Secretariat on Thursday. The policy offers financial incentives to semiconductor companies through two categories, aligned with the Union government`s Semicon 2.0 programme.

Track 1: Additional Incentives for Approved Projects

Under Track 1, projects approved by the Union government will receive additional financial support from Tamil Nadu. The State`s investment promotion subsidy will range from 15% to 25% of eligible capital expenditure, depending on the project category.

Key incentives include:

Silicon wafer fabrication: 25% State subsidy for eligible 300-mm wafer fabrication projects, in addition to the Centre`s 40% assistance.

Advanced semiconductor packaging: 25% State subsidy on eligible capital expenditure.

Legacy packaging: 20% State subsidy.

Semiconductor materials and testing: 15% subsidy for eligible raw materials, testing, characterisation and research facilities.

Semiconductor equipment: 15% State support for eligible manufacturing, assembly and refurbishment projects.

These incentives are subject to the scheme`s eligibility requirements and conditions.

Track 2: Incentives for Other Semiconductor Projects

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

Eligible companies can receive fixed capital subsidies ranging from 15% to 25% of eligible fixed assets. They may also qualify for annual turnover-based subsidies of up to 2% for five years, depending on the project category.

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

Additional Benefits for Semiconductor Companies

The Tamil Nadu Semiconductor Ecosystem Scheme 2026 also offers several incentives to support business expansion and employment generation.

Key benefits include:

- Training assistance of ₹10,000 per person per month.

- Payroll subsidies for eligible employment.

- Concessions on land costs.

- Stamp duty exemption.

- Electricity tax exemption for five years.

- Interest subsidy of 5% on eligible term loans for six years.

These benefits are designed to reduce project costs and encourage companies to establish semiconductor manufacturing and related facilities in Tamil Nadu.

Employment Conditions and Application Deadline

Companies seeking benefits under the scheme must meet local employment requirements. At least 50% of their direct workforce must comprise Tamil Nadu residents.

Additionally, at least 60% of high-value jobs, defined as positions with basic wages exceeding ₹25,000 per month, must be filled by residents of the State.

Eligible companies must submit their proposals to Guidance Tamil Nadu on or before September 30, 2027.

Tamil Nadu Aims to Strengthen Semiconductor Manufacturing

The new scheme is expected to support Tamil Nadu`s ambitions to attract semiconductor investments, develop advanced manufacturing capabilities and create skilled employment opportunities.

By offering capital subsidies, tax exemptions, training assistance and employment incentives, the State government aims to encourage domestic and international companies to establish semiconductor-related facilities in Tamil Nadu.