In an effort to attract chip-makers participating in the Centre's $10 billion chip subsidy plan, the Tamil Nadu government has announced a new chip policy.

Under this policy, the state government offers a capital subsidy of up to 50% of the capital expenditure (capex) assistance provided by the Centre for Semiconductor Manufacturing Units established in Tamil Nadu. Companies approved by the Centre for Financial Assistance under semiconductor schemes will be eligible for a comprehensive incentive package outlined in the Semiconductor and Advanced Electronics Policy 2024, unveiled at the Global Investors Meet 2024.

Semiconductor projects chosen by the Centre and establishing manufacturing units in Tamil Nadu will receive additional incentives, including support for personnel training, stamp duty concessions, and assistance with land and electricity. The state government plans to reimburse 50% of the expenditure incurred for in-house research and development (R&D) related to patents, copyrights, trademarks, and geographical indications registration, up to a maximum of Rs 1 crore for the investment period. Additionally, a 5% interest subvention will be provided as a rebate on actual term loans taken to finance the project.

To encourage prototyping within the state, eligible units will receive a subsidy of 25% of the capex for establishing product testing and prototyping facilities, capped at Rs 1 crore, as stated in the policy. The Semiconductor manufacturing sector will be designated as a sunrise sector under the Tamil Nadu Industrial Policy 2021. Companies with project proposals in semiconductor manufacturing can apply for incentives from the Tamil Nadu government while awaiting approval from the Centre. However, the disbursal of incentives is contingent on subsequent approval and receipt of financial assistance from the Centre.