TN Semiconductor and Advanced Electronics Policy aims to boost investment in the sector

The Tamil Nadu Semiconductor and Advanced Electronics Policy 2024 launched on Sunday aims to propel Tamil Nadu to the apex position in the value chain of the semiconductor and advanced electronics industry. This in turn will help in generating high-skilled employment opportunities, and accelerating innovation and technological advancements.

The focus of the policy launched by Chief Minister MK Stalin at the Global Investors Meet is on incentivising strategic investments, nurturing talent and fostering collaborations across industry, academia, and Government.

Anchor investments

The policy’s objectives include attracting anchor investments in semiconductor and advanced electronics manufacturing; to enable a semiconductor design ecosystem in the State through incentives, funding and industry academia collaboration; to contribute 40 per cent of India’s electronics exports by 2030 – it is over 30 per cent now – and to create a skilled talent pool of 2,00,000 persons in this sector by 2030.

The eligible units will be offered a Capital Subsidy by the Government of Tamil Nadu, up to 50 per cent of the CAPEX assistance provided by Government of India.

Capital Subsidy Mechanism

On capital subsidy, the policy said an escrow account (escrow 1) will be opened between State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) and the project company. All pro rata payments in a year shall be released after the corresponding share is mobilised by the project company and is deposited in the escrow 1.

First year – based on cash requirement projections for the upcoming quarter, Project Company shall release the amount first, then SIPCOT shall release the grant from Government of Tamil Nadu. The combined amount of Project Company and SIPCOT in escrow 1 will be transferred to the Government of India escrow account (escrow 2).

From the 2nd Year onwards, SIPCOT shall release the grant after verification that Government of India has released the relevant share, the policy says.

Prototyping is a crucial stage before commercialization wherein the Project Company can test the design and identify errors if any before the commercialization. To encourage prototyping within the State, eligible units will be provided with a subsidy of 25 per cent of the CAPEX for establishing product testing and prototyping facilities, subject to a ceiling of ₹1 crore.

Stamp duty exemption

A 100 per cent stamp duty exemption will be given for lease or purchase of land/ shed/ buildings intended for industrial use on land obtained from SIPCOT. In the case of private lands, a stamp duty concession will be provided as a 100 per cent back-ended subsidy for up to 50 acres, contingent upon the fulfilment of investment and employment commitments.

Investments in Electronics sector are eligible for a Structured Package of Incentives and Standard Incentives under the existing policies namely Tamil Nadu Industrial Policy 2021 (or) Tamil Nadu Electronics Hardware Manufacturing Policy 2020.

The Structured Package of Incentives for Advanced Electronics Manufacturing shall be applicable for ‘new/ expansion projects’ in the State with investments made from 1st January 2024. The companies should meet a minimum investment threshold of Rs 200 crores and minimum employment threshold of 150 jobs for the initial ₹200 crore investment. Further, for every additional ₹50 crore of investment, a minimum of 35 jobs should be generated, the policy said.

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