Why Odisha’s semiconductor policy is progressive over the one introduced by Gujarat and UP  

In sync with India’s semiconductor incentive scheme to attract investment in the chip ecosystem, including manufacturing or setting up fabs, state governments too are chipping in to attract investments. The latest one to join in is Odisha, with its own semiconductor policy. Interestingly, Odisha Semiconductor Policy focuses on all aspects of the scheme - semiconductor manufacturing, packaging and testing and fabless aka design and R&D.
 
“Odisha approved the most progressive 'Semiconductor Policy' For Fab, Fabless and Talent ecosystem development. It has become the '1st state' to offer DLI incentives for the Fabless companies in addition to government of India’s Incentives under the future Design scheme,” says Satya Gupta, President of VLSI Society. 

Gujarat was the first state to introduce a semiconductor policy by offering an incentive of 20 per cent of the approved project cost, over and above the 50 per cent offered by the centre. It has already attracted two high-value proposals - the first one being the $19.5 billion Vedanta semiconductor plant (which is yet to receive government approval for an incentive) and Micron’s $2.75 billion worth of assembly and testing plant. 

Following Gujarat, Uttar Pradesh has announced its semiconductor policy under which the state will offer a 25 per cent incentive over the centre government’s 50 per cent incentive. Odisha Cabinet has followed a similar incentive - 25 per cent incentives for Silicon, Compound, Display & ATMP, which brings out the total incentive for companies setting fabs in Odisha to 75 per cent. This means the total cost of the project they propose will be just 25 per cent. 

This development comes following the news that a UK-based company is planning to set up a semiconductor fabrication unit in Odisha's Ganjam district and is expected to invest  Rs 30,000 crore in the first phase. The SRAM & MRAM Technologies and Projects India Pvt Limited, the Indian unit of UK-based SRAM & MRAM Group, had also signed a memorandum of understanding (MoU) with the state government on March 26 to set up the semiconductor unit in the state. But other than fabs and ATMP, Odisha is also aiming to attract companies and start-ups that design chips. 

India is a preferred R&D hub for almost all global chip companies, including Intel, Samsung, Micron, NXP,  Qualcomm, and AMD to name a few. Approximately over 1,25,000 Indian engineers are working for these companies. But the government’s aim is not just to have fabs that manufacture chips but also to have successful fabless (that do not manufacture chips) companies such as Qualcomm and MediaTek.

“Odisha is the only state to have come up with incentives for the fabless product or IP companies. It is offering 20 per cent incentives for Fabless product/IP companies, bringing it to a total of 70 per cent, including 50 per cent by the government of India,” adds Gupta. As per the information accessible, the way it will be implemented is that the Odisha government will offer 10 per cent as seed money and 10 per cent as reimbursement.

The state also intends to offer support for 25 undergrad and 25 postgraduate institutes for R&D and capacity building. It will also offer support for faculty training, internships and manufacturing technicians training. There will also be an O-Chip Program for the Development of a Fabless ecosystem in Odisha, says Gupta. 

The state is hopeful that under the policy, at least one semiconductor manufacturing unit and 100 fabless design companies will be set up in Odisha. The semiconductor ecosystem in Odisha is also expected to generate around 5,000 direct employment and 20,000 indirect employment during the policy period of 7 years.

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