Madhya Pradesh’s new Semiconductor Policy 2025 aims to position the state as a global hub for chip manufacturing and innovation. Offering substantial incentives like capital subsidies and power tariff benefits, the policy targets attracting global investments and fostering R&D. With initiatives like the Global Investors Summit 2025, the state seeks to create a robust semiconductor ecosystem, reducing India’s reliance on imports.
Madhya Pradesh’s Bold Leap into Semiconductor Manufacturing
In a strategic move to establish itself as a key player in India’s semiconductor revolution, the Madhya Pradesh government has launched the Madhya Pradesh Semiconductor Policy 2025. Approved ahead of the Global Investors Summit (GIS) 2025, scheduled for February 24-25 in Bhopal, the policy is designed to attract global and domestic investments in chip design, manufacturing, and allied industries like electronics assembly and packaging. Chief Minister Mohan Yadav has emphasized the state’s ambition to become a tech manufacturing hub, leveraging its central location, business-friendly governance, and robust infrastructure.
The policy offers a comprehensive incentive framework to lure semiconductor manufacturers. It includes a capital investment subsidy of up to 25% of the project cost or 50% of the central government’s subsidy, whichever is lower. For projects not receiving central assistance, the state provides a subsidy of up to 40%, capped at Rs 150 crore. Additionally, an interest subsidy of 6% or the prevailing interest rate (whichever is lower) is available for up to five years, with a maximum limit of Rs 10 crore. To reduce operational costs, semiconductor firms can purchase land at subsidized rates and avail an electricity tariff concession of Rs 2 per unit for the first ten years. Projects exceeding Rs 400 crore in investment are eligible for tailored incentive packages, including infrastructure support, tax benefits, and additional financial incentives.
The policy also focuses on fostering innovation through public-private partnerships and collaborations with academic institutions. Special funds have been allocated to support research and development (R&D) initiatives, recognizing the critical role of innovation in semiconductor technologies. The state is streamlining regulatory procedures to ensure quick approvals and a hassle-free business environment, making it easier for companies to set up operations. Madhya Pradesh is actively seeking foreign direct investment (FDI), with Chief Minister Yadav’s recent visit to Japan sparking discussions on joint ventures and technology transfers.
Madhya Pradesh’s strategic advantages, such as its central location for efficient logistics, reliable power and water availability, and connectivity to major metros via road, rail, and air, make it an attractive destination for semiconductor firms. The policy aims to create a full-stack chip ecosystem, encompassing not just manufacturing but also design and packaging. This aligns with India’s broader goal of reducing its reliance on semiconductor imports, which currently account for nearly all of the country’s chip consumption, valued at Rs 1.1 lakh crore in 2020.
The initiative complements the central government’s India Semiconductor Mission (ISM), launched in 2021 with a Rs 76,000 crore outlay to develop a vibrant semiconductor and display ecosystem. The ISM has already approved six semiconductor manufacturing units across India, including a joint venture between HCL and Foxconn, with five in advanced stages of construction. Madhya Pradesh’s policy is poised to capitalize on this momentum, positioning the state as a critical node in India’s semiconductor ambitions.
The policy’s focus on skill development is another key highlight. Recognizing the shortage of skilled professionals in chip design, fabrication, and testing, the state is collaborating with academic institutions to align curricula with industry needs. This is expected to address the projected talent gap of 250,000-300,000 professionals by 2027, as per a TeamLease Degree Apprenticeship report. By fostering a skilled workforce, Madhya Pradesh aims to support not only manufacturing but also innovation in emerging fields like 2D material-based chips, which India is exploring as a transformative leap in semiconductor technology.
The global semiconductor market, valued at $500 billion in 2021, is projected to reach $1.3 trillion by 2029. India’s semiconductor market, currently worth $45 billion, is expected to surpass $100 billion by 2030, driven by demand in consumer electronics, automotive, and emerging technologies like AI, 5G, and IoT. Madhya Pradesh’s policy positions the state to tap into this growth, contributing to India’s goal of achieving a 10% share in the global market by 2030.
By offering a blend of financial incentives, infrastructure support, and a focus on R&D, Madhya Pradesh is carving a niche in India’s semiconductor landscape. The policy’s success will depend on its ability to attract major industry players and build a robust supply chain, addressing challenges like the lack of semiconductor-grade materials and the high capital intensity of chip fabrication. As the state prepares for GIS 2025, it is sending a clear message to global investors: Madhya Pradesh is ready to lead India’s chip revolution.
Disclaimer: This article is based on information from recent news reports, government announcements, and industry insights available as of July 2025. The data and projections are sourced from reputable publications, including India Briefing, PIB, and Drishti IAS. Readers are advised to verify details with official government sources for the latest updates.