Under its ₹500-crore Tamil Nadu Semiconductor Mission 2030 (TNSM 2030), Tamil Nadu has approved the Semiconductor Design Promotion Scheme, solidifying its leadership in India’s electronics and semiconductor industry. The plan, which was unveiled in the Tamil Nadu Budget 2025, is to establish the State as the future hub of chip innovation by boosting the State’s fabless design ecosystem through targeted subsidies and prototyping grants. A government order states that companies situated in Tamil Nadu that design semiconductors for Integrated Circuits (ICs), chipsets, system on chips (SoCs), intellectual property cores, and semiconductor-linked design would be given financial incentives and facilitation support. For example, a payroll subsidy for Tamil Nadu citizens will be provided to businesses whose products are used commercially. In the first year, it will be 30%; in the second, it will be 25%; and in the third, it will be 20%. The monthly maximum for this subsidy will be ₹20,000 per employee.
Under a cap of ₹5 crore per company, companies whose goods have not yet been commercially deployed will receive a payroll subsidy that covers 50% of the payroll cost (basic wages) of the employees for three years. An expert committee should be shown the technical feasibility of the proposed product by the corporation. Additionally, the government will bargain with domestic and foreign semiconductor factories to obtain discounted prices for producing the chips created by regional firms. In accordance with the Tamil Nadu Transparency in Tenders Act, the government would promote the use of semiconductor products created in Tamil Nadu in public procurement. “Despite our unparalleled talent pool and established electronics ecosystem with international players, we remain unfazed by significant semiconductor investments being dragged to other States,” stated Industries Minister T.R.B. Rajaa. We will concentrate on semiconductor design and research and development while still luring manufacturing investments. Our Chief Minister has stated unequivocally that nothing will impede our aspirations in this field. The establishment of Centers of Excellence (CoEs) to supply the infrastructure needed for chip design, testing, and validation is another significant investment made by the state. In order to promote these centers, Tamilnadu Industrial Development Corporation Limited (TIDCO) will solicit commercial investment from the private sector. It will be a “for-profit” business (a special purpose vehicle) formed as a partnership between TIDCO and a private corporation or academic institution. Additionally, TIDCO will be allowed to grant the SPV up to 40% of the project cost, with a maximum of ₹75 crore per project. The grant will be reimbursed by the government.
Regardless of the size of the grant, TIDCO may receive 20% ownership in each of the financially aided SPVs in accordance with a government order. In order to accommodate potential future investors in the project, the TIDCO Board has also been authorized to reduce the holding to 5%. 1,000 students from the State’s engineering institutes will receive training assistance from the government as part of the India Semiconductor Workforce Development Program (ISWDP). Promoting fabless businesses that design, test, and package in the state; promoting the manufacturing of semiconductor machinery; promoting research and innovation in the semiconductor industry; and developing a skilled labor force for the domestic and international semiconductor industries are the four main areas of focus for TNSM.
