Tamil Nadu has launched the Tamil Nadu Semiconductor Ecosystem Scheme 2026, offering state subsidies of up to 25% to attract investment in chip manufacturing, advanced packaging, testing, equipment and materials. Chief Minister C. Joseph Vijay unveiled it in Chennai on 15 October.
Two tracks
The scheme splits projects by whether they are also taking central support.
Track 1: projects approved under the Union government's programme. These get an additional state subsidy of 15% to 25% of eligible capital expenditure:
- 25% for 300-mm silicon wafer fabrication, on top of the Centre's 40% financial assistance
- 25% for advanced packaging
- 20% for legacy packaging
- 15% for materials, testing and equipment research projects
Track 2: projects not seeking help under Semicon India Programme 2.0. These can get fixed capital subsidies of 15% to 25% on eligible fixed assets, plus turnover-based incentives of up to 2% a year for five years.
The rest of the package
- Minimum investment of ₹50 crore for specified materials and packaging projects, rising to ₹500 crore for advanced packaging
- Full stamp duty exemption and land cost concessions
- Five years of electricity tax exemption
- A 5% interest subsidy on term loans for six years
- Payroll subsidies and training assistance of up to ₹10,000 per person per month
The local hiring condition
Companies must ensure Tamil Nadu residents make up at least 50% of their direct workforce. At least 60% of high-value roles, defined as jobs with a basic monthly wage above ₹25,000, must also go to state residents. Proposals go through Guidance Tamil Nadu, with a deadline of 30 September 2027.
My read
For a wafer fab, a state 25% on top of the Centre's 40% is a strong offer at a time when several states are chasing the same few fab and packaging projects. Track 2 is the more interesting design choice to me. It gives smaller materials, testing and equipment players a route that doesn't depend on getting into the central programme, and that is where a lot of supply-chain depth gets built.
The local hiring rule keeps the jobs in the state. But semiconductor work needs skills that are scarce everywhere, so the test will be whether colleges and training programmes can produce enough people to fill those 60% high-value roles. The ₹10,000-a-month training support suggests the government has thought about that.
Source: Tamil Nadu unveils semiconductor scheme with 25 per cent subsidy, ETDataCenters
