The Madhya Pradesh government has approved a new semiconductor policy to enhance state chip design and manufacturing. The policy, sanctioned by the State Cabinet on February 4, 2025, includes capital and interest subsidies, land at concessional rates, and subsidized electricity for semiconductor fabrication units, design facilities, and other related enterprises.

With a rising demand for semiconductor components across key industries such as electronics, automotive, and information technology, Madhya Pradesh is positioning itself as a strategic hub for semiconductor investments. The policy provides a capital investment subsidy of up to 25% of the total investment or 50% of the subsidy provided by the Government of India, whichever is lower, for eligible projects. For projects that do not receive central government support, a capital investment subsidy of up to 40% is available, subject to a cap of Rs 150 crore.

Additionally, the policy offers an interest subsidy of 6% or the prevailing interest rate, whichever is lower, for up to five years, with a maximum limit of Rs 10 crore. To further incentivize investment, semiconductor companies can avail land at concessional rates and a power tariff subsidy of Rs 2 per unit for the first ten years, significantly reducing operational expenses.

Projects with an investment exceeding Rs 400 crore will be considered for customized incentive packages, including additional infrastructure support, tax rebates, and other financial incentives. The policy also promotes public-private partnerships and collaboration between government entities, academic institutions, and the private sector. Foreign Direct Investment (FDI) and international partnerships are encouraged to bring global expertise and technological advancements to the state.

The Madhya Pradesh government is also prioritizing research and development (R&D) in semiconductor technologies, offering financial assistance through special funds and programs. Furthermore, the state aims to streamline regulatory processes to expedite project approvals, ensuring a business-friendly environment for semiconductor firms.

Cabinet Approves Key Policies Ahead of Global Investor Summit

In a strategic move ahead of the Global Investor Summit (GIS), scheduled for February 24-25, 2025, in Bhopal, the Madhya Pradesh Cabinet has approved several crucial policies, including the semiconductor and drone policies.

Chief Minister Mohan Yadav, who chaired the Cabinet meeting following his four-day visit to Japan, highlighted efforts to attract Japanese investments. He noted that multiple Japanese firms would participate in GIS and that discussions had been held on potential collaborations in metro rail technology, smart transportation systems, urban planning, water management, and waste management for cities like Bhopal and Indore.

To strengthen economic ties with Japan, the government has drafted a blueprint to facilitate Japanese investment in the state.

Briefing the media, Cabinet Minister Kailash Vijayvargiya emphasized that the semiconductor policy would play a crucial role in Madhya Pradesh’s long-term industrial growth. “This initiative will help the state emerge as a global competitor in the semiconductor industry while boosting local economic development and innovation in semiconductor design, R&D, and manufacturing,” he stated.

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Additionally, the Cabinet has approved the Madhya Pradesh Drone Promotion and Usage Policy, 2025, to attract investments in the rapidly growing drone sector. Another significant decision includes the implementation of PM Awas Yojana (Urban) 2.0, which aims to construct 10 lakh affordable houses over the next five years for economically weaker sections and lower-middle-class families.

With Prime Minister Narendra Modi expected to attend GIS, the Madhya Pradesh government is intensifying its efforts to secure investments across multiple sectors. As part of these efforts, seven regional industry conclaves have already been organized across various cities to promote investment opportunities statewide.

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