Odisha: India’s Attractive Semiconductor Hub

Learn how Odisha has risen to prominence as India's prime semiconductor hub, offering irresistible incentives to companies looking to invest in the booming semiconductor industry

Introduction

In a groundbreaking move to solidify its position as a major player in India’s semiconductor industry, the Odisha government has unveiled a visionary new policy offering a range of incentives to entrepreneurs and investors in the sector.

This landmark initiative makes Odisha the third state in the country, following Gujarat and Uttar Pradesh, to implement a dedicated policy for the semiconductor domain.

Known as the Odisha Semiconductor Manufacturing and Fables Policy, 2023, it extends benefits to both semiconductor manufacturing companies participating in the India Semiconductor Mission (ISM) and those making direct investments in the state, thus surpassing policies offered by other states.

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Attractive Incentives for Investors

Under the new policy, companies entering through the ISM will receive an additional 50 percent subsidy on top of the subsidy provided by the Central government on their fixed capital investment (FCI).

Non-ISM category units will also be eligible for a substantial 30 percent FCI subsidy based on the project cost.

These added financial benefits significantly enhance the appeal of Odisha as a prime destination for semiconductor investments.

Land, Power, and Water Tariff Incentives

Odisha’s semiconductor policy sweetens the deal for mega projects with investments exceeding Rs 5,000 crore by offering an extra 25 percent subsidy on land rates, as per the Industrial Policy Resolution (IPR).

Additionally, all mega projects will receive a 10 percent additional subsidy on IPR land rates for the first 200 acres dedicated to their projects. Water supply at project sites is made affordable at a rate of Rs 7.65 per cubic meter, while power supply will be provided at an attractive rate of Rs 2 per unit for a duration of ten years, with complete exemption from electricity duty and inspection charges.

State GST Reimbursement and Production-Linked Incentives

Further boosting the appeal of the policy, semiconductor units will receive state GST reimbursement of up to 100 percent of their FCI. Moreover, production-linked incentives amounting to one percent of net sales turnover will be provided for a duration of five years, providing a major impetus to sustained growth and productivity in the sector.

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Incentives for Fabless Design Companies

The policy extends its support to fabless design companies that fall outside the purview of the Centre’s design-linked incentives (DLI) scheme.

The Odisha government will incentivize these companies by providing them with 10 percent of the development cost as seed money, along with reimbursing 10 percent of the development cost upon achieving significant milestones.

Each project or company can benefit up to Rs 20 crore, with Rs 7.5 crore allocated for proof of concept (PoC) and Rs 12.5 crore for productization.

Additionally, the policy proposes an extra grant of Rs 10 crore for the first five mega projects focusing on system-on-chip, application-specific integrated circuit, or processor-class products registered by Odisha-based companies.

Capex Incentives to Promote Electronic Components and Semiconductors

Odisha’s forward-thinking approach includes providing 10 percent capex incentives, in addition to the Centre’s 25 percent incentives, for raw materials and supply chain products, further promoting the manufacturing of electronic components and semiconductors within the state.

Employment Generation and Future Prospects

The Odisha Semiconductor Policy has ambitious goals for employment generation, aiming to create around 5,000 direct jobs and 20,000 indirect jobs over its seven-year period.

By providing a conducive environment and a plethora of incentives, the policy also aspires to attract at least one semiconductor manufacturing unit and over 100 fabless design firms to set up operations in Odisha, thereby positioning the state as a dominant force in India’s semiconductor landscape.

Conclusion

In conclusion, Odisha’s new semiconductor policy has set the stage for remarkable growth in the industry, presenting an array of enticing incentives to both domestic and international investors. With its strategic focus on nurturing semiconductor manufacturing and fabless design companies, coupled with generous financial benefits, land and power incentives, and employment generation prospects, Odisha is primed to become India’s leading semiconductor hub, driving innovation and economic progress in the state and beyond.

Editorial Team
Editorial Team
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