The Government of Gujarat has unveiled its Semiconductor Policy for 2022-27, a strategic initiative designed to establish the state as a prominent hub for semiconductor and display manufacturing. This policy aims to significantly enhance India’s position in the global electronics supply chain. The timing of this policy is particularly relevant given the current state of the global semiconductor industry. Valued at over $400 billion, the sector is experiencing rapid growth and increased demand. However, recent global events, including the COVID-19 pandemic and geopolitical tensions, have highlighted vulnerabilities in the international supply chain. India has not been immune to these challenges, with reports indicating a 5-7% production loss due to chip shortages. The State’s Semiconductor Policy seeks to address these issues while aligning with the central government’s vision of expanding India’s role in the global electronics value chain.
Central to the policy is a substantial incentive package aimed at attracting major industry players. The government offers additional capital assistance of 40% over and above the central government’s support for eligible projects. This provision is particularly significant for capitalintensive ventures such as semiconductor and display fabrication units.
The Dholera Special Investment Region (DSIR) is prominently featured in this initiative, with plans for its development into a specialised “Semicon City.” To encourage investment in DSIR, the policy offers considerable land subsidies: 75% for the first 200 acres and 50% for additional land. These incentives, combined with power tariff subsidies, stamp duty reimbursements, and support for clean room construction, create a compelling proposition for potential investors.
The policy’s scope extends beyond financial incentives, emphasising the creation of a comprehensive ecosystem
that includes both upstream and downstream industries. The Gujarat State Electronics Mission (GSEM) will serve as a single-window clearance system, streamlining administrative processes and enhancing ease of doing business.
Furthermore, the government has committed to providing uninterrupted power and water supply, which are critical factors for semiconductor manufacturing operations.
A distinguishing feature of this policy is its holistic approach. In addition to attracting large-scale investments, it focuses on developing skilled human resources and promoting research and innovation. The government plans to
collaborate with industry and academia to establish advanced training and skill development centres, ensuring a consistent supply of qualified personnel for the sector.
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The potential impact of this policy extends beyond the state’s borders. If successfully implemented, it could play a
crucial role in reducing India’s dependence on imported electronic goods, thereby positively impacting the country’s foreign exchange reserves. Moreover, it could position India as a viable alternative in the global semiconductor supply chain, a particularly significant consideration given the current geopolitical climate. However, it is important to acknowledge the challenges inherent in this endeavour. The semiconductor industry is characterised by its complexity, high entry barriers, and intense global competition. The policy’s success will depend on effective
implementation, sustained government support, and the ability to attract not only manufacturing units but also design and research and development centres.
In a nutshell, the Gujarat Semiconductor Policy represents a significant step towards realising India’s technological ambitions. It signals the country’s readiness to compete in the global electronics manufacturing arena. As the policy unfolds over the next five years, its progress and impact will be closely monitored to assess whether the state can indeed become a key player in the global semiconductor industry, potentially ushering in a new era of technological self-reliance and innovation for India.
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