The state of Gujarat has unveiled its Semiconductor Policy for 2022-27 in a bid to strengthen its electronics system design and manufacturing ecosystem and become part of the sector’s global value chain. The policy seeks to attract semiconductor fabrication units, display fabrication units, silicon photonics and semiconductor assembly, testing, marking and packaging facilities to the state.
Unveiled on July 27, the ‘Gujarat Semiconductor Policy 2022-27’ offers a range of subsidies for entrepreneurs and investors in the electronics system design and manufacturing (ESDM) sector – on land, power, and water tariffs. The five-year policy aims to speed up project execution besides establishing a semiconductor and display fabrication (FAB) manufacturing base in the state.
The Gujarat Semiconductor Policy 2022-27 takes its lead from the four policies under the India Semiconductor Mission (ISM), announced by the central government last year, and intends to attract businesses and research and development (R&D) to its home ground.
Gujarat has become the first State to launch a dedicated policy for semiconductors and display manufacturing. The policy aims to generate about two lakh [200,000] jobs in the next five years. – Chief Minister Bhupendra Patel
To support this goal, the Gujarat government will be setting up a ‘Semicon city’ over 5000-10,000 acres at the Dholera Special Investment Region (SIR), which will serve as a dedicated manufacturing base for the semiconductor and display fab sector.
The Indian semiconductor market was valued at US$15 billion in 2020 and is projected to reach US$63 billion by 2026. However, the semiconductor and display manufacturing processes are technology and capital-intensive, involving high risks, long gestation and payback periods, as well as leaps in technology R&D.
This naturally requires sustained and high levels of investment, which is why the Gujarat government has sought to create conditions conducive to the growth of a sustainable and robust semiconductor and ESDM base.
In rolling out the state policy, another stated goal is reducing India’s dependence on East Asia in the sector, particularly in the light of fluid geopolitics, black swan events like the pandemic, and acute supply shortages due to demand rise fueled by the growth of emerging markets.
Gujarat is among India’s most industrialized states and boasts of robust infrastructure and logistics connectivity, industrial estates and specialized industrial zones, leading educational institutions, and a strong talent base.
The Gujarat Semiconductor Policy 2022-27 will facilitate eligible projects during the land allotment stage, expedite approvals processes, improve access to utilities like power, water, and gas besides industrial infrastructure, and offer a support package of fiscal incentives.
An eligible project is a project by any company / consortia / joint venture, which has applied to set up operations in Gujarat under the following Government of India schemes: ‘Scheme for setting up of Semiconductor Fabs in India’, ‘Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking, and Packaging (ATMP) / OSAT facilities in India’.
The project undertaking must thus be approved by the ISM under the Ministry of Electronics and Information Technology (MeitY) to be considered eligible for the Policy subsidies in Gujarat.
The Gujarat government will support one semiconductor fabrication project and one display fabrication project under the Gujarat Semiconductor Policy 2022-27.
If multiple applications are received, the nodal implementing agency will appraise the cost-benefits of the undertaking. The Gujarat government will then evaluate on a case-by-case basis by considering the scale of investment, land availability, jobs creation, technology and economic advantages, and State budget scope.
Investors should note that projects approved under the Design Linked Incentive (DLI) Scheme of the central government will not be eligible for benefits under the Gujarat Semiconductor Policy 2022-27. They can however avail benefits under the Gujarat IT/ITeS Policy 2022-27.
The Gujarat government shall constitute a High-Powered Committee (HPC) for approving assistance to display FAB projects, semiconductor FAB projects, and projects with a proposed investment of INR 10 billion or more.
A State-Level Empowered Committee (SLEC) shall be constituted for approving assistance for projects with a proposed investment of less than INR 10 billion.
Depending on the fulfilment of eligibility criteria whose conditions may be periodically amended, the eligible project/unit will be entitled to specified capital assistance and subsidies.
Under the Gujarat Semiconductor Policy 2022-27, stakeholders will be supported throughout their investment cycle. The below table notes some key policy interventions.
Non-Fiscal Support Under the Gujarat Semiconductor Policy 2022-27
Enhancing Ease of Doing Business – Self Certification
Eligible projects will be facilitated for statutory compliances under:
– Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2019
– The Contract Labor (Regulations & Abolition) Act, 1970
– The Payment of Wages Act, 1936
Enhancing Ease of Doing Business – Single Window Clearance
The Gujarat State Electronics Mission will act as a single point of contact for eligible projects and facilitate state-level statutory clearances in an expedited and transparent manner.
Effluent and hazardous waste management
The government shall provide / facilitate easy access to common effluent treatment plants (CETPs) and treatment, storage, and disposal facilities (TSDFs) for hazardous waste management to the FAB projects as per the applicable user charges of the appropriate authority for proper treatment, recycling, and disposal of the effluent and hazardous waste produced during the operations of a semiconductor or display FAB project.
The discharge of effluents to the CETP and TSDF facilities must meet the input parameters and discharge norms of the respective facilities.
Provision of adequate redundancy in the power grid to ensure quality power supply to FAB projects for smooth operation.
Provision of potable water supply that is uninterrupted.
The Gujarat government shall facilitate the companies in identification and procurement of suitable developed land that is free from any encumbrance and is well connected to the logistics and transport hub in the state, Further, the government shall strive to reduce the various hurdles in procurement of the allotted land, such as issues related to Right of Way (RoW), Change of Land Use (CLU) permissions, etc.
Application form and submission guidelines
Scheme for setting up of Semiconductor Fabs in India
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Released December 30, 2021
Scheme for setting up of Display Fabs in India
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Released December 30, 2021
Scheme for setting up of Compound Semiconductors / Silicon Photonics / Sensors Fab and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) / OSAT facilities in India
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Released December 30, 2021
Design Linked Incentive (DLI) Scheme
Link to PDF: Gazette Notification on Tuesday, December 21, 2021.
Link to PDF: Gazette Notification on Thursday, December 30, 2021.
Link to Press Release dated January 16, 2022: Applications invited under the Design Linked Incentive (DLI) Scheme from domestic semiconductor chip design firms
A dedicated portal has been made available – www.chips-dli.gov.in – for inviting online applications from January 1, 2022 to December 31, 2024. The applicants can find the guidelines of the DLI Scheme on the portal and register themselves for availing support under the scheme.
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