Tamil Nadu launches a semiconductor scheme that also backs chip projects the Centre has not approved, with 15% to 25% capital subsidies and local-hiring rules.

What the scheme does

Tamil Nadu has released the Tamil Nadu Semiconductor Ecosystem Scheme 2026. DT Next says Chief Minister C Joseph Vijay launched the scheme document at the Secretariat on Thursday. It builds on the Union government's Semicon 2.0 programme.

The scheme has two tracks. Track 1 is for projects the Centre has approved under Semicon 2.0. The state adds a subsidy of 15% to 25% of the capital spending the Centre approved, depending on the category. Track 2 is for projects that did not apply for central aid, or applied and were not selected. Business Today describes this as separating state incentives from central approval.

Subsidies and other benefits

For Track 1, DT Next lists 25% state support for 300-mm silicon wafer fabrication, on top of the Centre's 40%, and 25% for advanced packaging. Legacy packaging gets 20%. Semiconductor-grade raw materials, testing facilities and equipment R&D facilities get 15%.

Track 2 offers a fixed capital subsidy of 15% to 25% of eligible fixed assets. DT Next adds a turnover-based subsidy of up to 2% a year for five years, with minimum investments of Rs 50 crore for certain materials and packaging products and Rs 500 crore for advanced packaging.

Other benefits in the reports include land and stamp duty concessions, a five-year electricity tax exemption, interest support on term loans, and help with product testing, prototyping and IP registration.

Hiring and local sourcing

Both tracks require at least 50% of the direct workforce to be Tamil Nadu residents. At least 60% of high-value jobs, meaning basic wages above Rs 25,000 a month, must go to state residents.

Business Today reports a payroll subsidy of 10% of basic wages for qualifying local employees for 10 years. Training support is Rs 10,000 per person per month for 12 months, or 24 months for women, transgender employees, persons with benchmark disabilities and SC/ST employees. Companies with at least 20% localisation in their cost of goods sold can get an additional capital subsidy.

Who can apply and when

The scheme covers chip fabs, assembly, testing and packaging units, equipment, materials, chemicals, gases, testing facilities and research infrastructure. Proposals go to Guidance Tamil Nadu and must be submitted on or before 30 September 2027, both reports say. Neither report mentions AI directly.