Madhya Pradesh Semiconductor Fab Policy
The Indian government has long acknowledged the crucial role of semiconductors in the digital age. From smartphones and electric vehicles to medical devices and defense systems, semiconductors power nearly every modern technology. While India has made strides in design and software development, it still lags behind in semiconductor manufacturing. That’s now set to change.
With the launch of the Madhya Pradesh Semiconductor Fab Policy, the state is stepping into a leadership role, aiming to create a thriving ecosystem for chip manufacturing. The policy promises strategic incentives, infrastructure, and support mechanisms to attract global chipmakers and domestic manufacturers.
In this article, we explore the key features, goals, incentives, and implications of the policy—and how companies like yours can leverage it with expert guidance from Cretum Advisory.
Understanding Why the Madhya Pradesh Semiconductor Fabs Policy is Needed?
A semiconductor fab (fabrication plant) is a high-tech facility where integrated circuits(ICs), commonly known as chips, are manufactured. These are extremely complex and capital-intensive units, requiring precision machinery, cleanroom environments, skilled personnel, and stable infrastructure. India currently imports nearly 95% of its semiconductors, making it vulnerable to global supply chain disruptions. Establishing domestic fabs would not only reduce import dependency but also enable India to become a net exporter in the electronics sector.
Madhya Pradesh’s Semiconductor Fab Policy: Vision and Objectives
The Madhya Pradesh Semiconductor Fab Policy 2025 is crafted to complement the national Semicon India Program and aims to:
- Attract global chip manufacturers to set up fabrication units
- Encourage domestic innovation in R&D, testing, and chip design.
- Develop specialized infrastructure and Electronics Manufacturing Clusters (EMCs)
- Create over 50,000 high-tech jobs across the value chain
- Allow startups and MSMEs to engage in the semiconductor and electronics industries.
Key Highlights of the Policy
1. Capital Subsidy
The government of Madhya Pradesh is offering capital subsidies of up to 50% on eligible project costs. This includes costs for:
- Semiconductor manufacturing equipment
- Cleanroom infrastructure
- Testing and packaging facilities
This is in addition to any central government assistance received under the Semicon India Program, which offers 50% fiscal support on project cost.
2. Power and Water Subsidies
Semiconductor fabs are resource-intensive. To ease operational costs:
- Power rates have been lowered to about ₹4–₹5 per unit.
- Water required for fabrication will be supplied at 75% subsidized rates
3. Land and Infrastructure Support
- Plug-and-play industrial land in designated Electronics Manufacturing Clusters
- 24/7 industrial power, water, and logistics support
- Fast-track approvals for environmental and construction clearances
4. Single-Window Clearance Mechanism
All applications, permissions, and clearances will be handled through a Single Window Facilitation Cell. This ensures ease of doing business and minimizes bureaucratic delays.
5. R&D and Skilling Incentives
- Up to ₹50 crore in grants for R&D labs and chip design innovation
- 25–40% financial support for training institutes and university collaborations
- Special programs in collaboration with IITs and NITs to upskill the local workforce
Who Can Benefit from This Policy?
The policy is geared toward encouraging investment across the semiconductor value chain. Potential beneficiaries include:
- Global chipmakers planning India entry
- Indian electronics manufacturers are looking for backward integration
- Startups working in chip design, EDA tools, and advanced packaging
- Research institutions and universities focusing on nanoelectronics
- Industrial conglomerates expanding into electronics and technology manufacturing
India’s Semiconductor Landscape: Market Insights
- India’s semiconductor market is projected to reach $63 billion by 2026
- Every year, the nation imports more than $20 billion worth of chips.
- Global chip shortages have underlined the need for strategic self-reliance
- MP aims to establish 2 major semiconductor fabs in the next 5 years
This is a defining moment for India’s technology ecosystem, and Madhya Pradesh is positioning itself at the center of this transformation.
How Cretum Advisory Can Support You?
While the Madhya Pradesh government is offering attractive incentives, applying, executing, and complying with policy norms can be overwhelming. That’s where Cretum Advisory steps in. We provide end-to-end Financial advisory services and execution support for businesses in the semiconductor, electronics, and tech sectors.
Our Core Services Include:
1. Incentive Eligibility & Application
We assess your project’s eligibility and prepare your documentation to avail capital and operational subsidies.
2. Entity Setup & Land Allocation
From company registration to acquiring land in an EMC, we assist every step of the way.
3. Project Reports & Compliance Filings
Preparation of DPRs, cash flow models, and government-submission-ready files.
4. R&D and Skilling Grant Assistance
Apply for research incentives and collaborate with training partners for government support.
5. GST and Tax Advisory for Tech Units
Ensure correct classification, input credit planning, and return compliance.
6. FDI & FEMA Advisory
For global companies, we assist with RBI compliance, FDI filings, and regulatory clearances.
7. Startup/MSME Support
We help you get Udyam & DPIIT recognition for additional benefits under the Startup India and MSME schemes.
Challenges Ahead—and How to Navigate Them?
While the policy offers significant opportunities, investors may face challenges such as:
- High capex requirements
- Regulatory delays in approvals
- Lack of a local skilled workforce
- Vendor and ecosystem dependence
With Cretum Advisory as your growth partner, you can mitigate these risks through strategic planning, strong documentation, and experienced execution.
| Parameter Details |
| Policy Launch 2024 |
| Capital Subsidy Up to 50% of Capex |
| Water Subsidy Up to 75% |
| Target Jobs 50,000+ |
| Export Incentives Available via Central Policies |
| Target Sectors: Analog, Mixed-Signal, Packaging, Chip Design |
| Time to Apply Rolling window; early applicants get priority |
Frequently Asked Questions (FAQs)
Q1. Who can apply under the MP Semiconductor Fab Policy?
Domestic and international chipmakers, R&D firms, and tech startups.
Q2. Is this policy available to design-only startups?
Yes, the state supports fabless design units and provides R&D incentives.
Q3. Can I avail myself of both central and state benefits?
Yes, this policy works in tandem with the Semicon India Program.
Q4. Is land allotted on lease or freehold?
Mostly lease-based in industrial clusters with long-term tenure.
Q5. How can I start the application process?
For an eligibility check and DPR preparation, get in touch with Cretum Advisory.