Tamil Nadu has launched a dedicated semiconductor incentive scheme to attract investments in chip manufacturing and strengthen its position in India’s advanced electronics industry. Chief Minister C. Joseph Vijay unveiled the Tamil Nadu Semiconductor Ecosystem Scheme 2026 at the state Secretariat in Chennai on October 15. The initiative aims to support investments across the semiconductor value chain, from chip design and wafer fabrication to assembly, testing, packaging and manufacturing equipment.
The scheme is designed to complement incentives offered by the Union government while addressing the specific requirements of companies planning semiconductor-related projects in the state.
Two Tracks of Incentives for Investors
The Tamil Nadu Semiconductor Ecosystem Scheme will operate through two categories of support.
Under the first category, the state will provide additional incentives to projects approved under the Union government’s Semicon India Programme 2.0 and the India Semiconductor Mission. Depending on the project category, the investment promotion subsidy will range from 15% to 25% of eligible capital expenditure approved by the Centre.
The second category will offer customised, need-based incentives to eligible projects that are not covered by central schemes but are considered strategically important for developing Tamil Nadu’s semiconductor ecosystem.
The approach is intended to make the state’s support more responsive to the investment requirements of different semiconductor businesses.
Support Across the Semiconductor Value Chain
The policy covers a broad range of activities, including:
- Semiconductor chip design
- Wafer fabrication facilities
- Assembly, testing, marking and packaging operations
- Semiconductor manufacturing equipment and raw materials
- Research and development
- Skill development
By targeting the wider value chain, Tamil Nadu aims to attract not only large chip manufacturers but also suppliers, technology developers and supporting businesses. A stronger local ecosystem could help companies access specialised services, materials and skilled workers while creating new opportunities for electronics manufacturing.
Semiconductor and Electronics Park Planned in Kancheepuram
The scheme follows the state government’s earlier announcement of a Semiconductor and Electronics Park at Maduramangalam in Kancheepuram district. The proposed park is part of Tamil Nadu’s broader effort to expand its advanced manufacturing base and attract technology-intensive investments.
The state has been seeking to build on its existing electronics manufacturing ecosystem and industrial infrastructure. Semiconductor investments could support additional activity in equipment manufacturing, materials supply, research and related engineering services.
Complementing India’s Semicon 2.0 Programme
The Union Cabinet approved the Semicon India Programme 2.0 in July 2026 to strengthen India’s semiconductor capabilities across manufacturing, equipment, materials, research and talent development. Tamil Nadu’s new policy adds state-level support to the national initiative, while also creating a route for customised assistance to other eligible strategic projects.
For investors, the availability of central and state incentives could influence decisions on project location, capital expenditure and supply-chain development. The final benefits available to each company will depend on eligibility requirements and the applicable scheme conditions.
With the launch, Tamil Nadu is seeking to attract more semiconductor investments, expand its advanced electronics manufacturing capabilities and create skilled employment opportunities. The policy’s impact will depend on how effectively the incentives translate into investment commitments, project execution and the development of local suppliers.
