Madhya Pradesh gets a ‘fab’-ulous investment policy


May 19, 2015: The government of Madhya Pradesh has given the semiconductor industry a boost with its new investment policy. This move is an encouraging one for the upcoming fab units and for the unemployed youth of the state

By Shweta Sengar

The Analogue Semiconductor Fabrication (fab) Investment Policy 2015, launched by the government of Madhya Pradesh, is another stepping stone in the path of making India a manufacturing hub. The policy aims at developing analogue semiconductor fabrication and micro and nano manufacturing technology as a vibrant industry for inclusive growth, creating employment opportunities for people across the state. The policy will stay in force up to December 2016 or till the announcement of the next policy.


The policy aims to increase the flow of investments into Madhya Pradesh to make India and the state self-sufficient in electronics manufacturing. Along with promoting the establishment of fab units in the state, this move will help maximise direct and indirect employment generation opportunities for the youth in the state.

The road map

As per the policy, the state government will provide land for establishing a fab unit. It will also provide state-of-art infrastructure that conforms to international standards. Along with these, the government will facilitate transportation of raw materials and finished goods efficiently by providing transport, warehousing and allied infrastructure. The state government will also look after the social welfare of the employees working at the fab units.

Special focus is being laid on the chip manufacturing sector for the development and promotion of electronics manufacturing. A wafer fab facility with a minimum investment of Rs 30 million will qualify as a fab unit for the purpose of availing incentives, concessions and subsidies under this policy.

Incentives offered under the policy

There are a lot of incentives outlined in the policy, which will benefit the fab installers. The state government will reimburse the cost of constructing the shell of the building that will house the fab unit, after deducting any other subsidy available to the facility from the Centre. The other incentives that the policy offers are:

  • Contiguous land measuring up to 303,514.2sqm, as per the actual requirement of the fab unit assessed by the authorised agency, will be provided free of cost on a 50-year renewable lease

  • Stamp duty payable by any unit located in the fab investment area on mortgage/hypothecation with banks/financial institutions will be exempted if such a unit is certified as a fab unit by the authorised agency

  • The state government will reimburse the cost, if any, paid by the unit for electricity charges, including duties, over and above US$ 7.5 per kWH up to a period of 10 years from the date production starts

  • The state government will provide uninterrupted, adequate water supply for the fab unit

  • The state government will provide quality roads between the fab unit and the nearest airport

  • A Free Trade Zone will be set up at the concerned airport in collaboration with the government of India, which will remain open 24×7

  • The unit will be covered under the Essential Services Act

  • Units necessary for fab operation will be provided all the benefits under this policy

  • The total value of incentives paid under this policy to any unit will be limited to 15 per cent of the total capital of the unit

  • The state government will aid the unit in obtaining various incentives/subsidies as provided under this policy

With all these initiatives and investments pouring in from the government, the semiconductor industry is expected to soon get going in India.