Tamil Nadu launched a new incentive package for chipmaking on 15 October 2026: the Tamil Nadu Semiconductor Ecosystem Scheme 2026, which offers state subsidies of 15 to 25 per cent of eligible capital costs. Chief Minister C. Joseph Vijay released it at the Secretariat, and proposals must reach Guidance Tamil Nadu, the state’s investment agency, by 30 September 2027, DT Next reported.
The state is building on electronics assembly it already has. Tamil Nadu exported US$14.65 billion of electronics in 2024-25, or 41.23 per cent of India’s total, making it the top exporting state, according to Guidance Tamil Nadu. The agency calls Chennai “The Electronics Capital”. Here is what the new scheme offers, the policies behind it and what is planned around the city.
What the 2026 scheme offers
The scheme covers semiconductor manufacturing, equipment, materials, advanced packaging and testing facilities. It has two tracks, according to DT Next’s report:
| Activity (Track 1) | State support |
|---|---|
| 300-mm silicon wafer fabrication | 25%, on top of the Centre’s 40% |
| Advanced packaging | 25% |
| Legacy packaging | 20% |
| Raw materials, testing facilities, equipment R&D | 15% |
| Equipment manufacturing, assembly, refurbishment | 15%, with conditions |
Track 1 is for projects approved under the Centre’s Semicon 2.0 programme, and the state percentage applies to the capital cost the Centre has approved. Track 2 is for projects that did not apply to, or were not picked by, the central scheme: they get a fixed capital subsidy of 15 to 25 per cent plus a turnover-linked subsidy of up to 2 per cent a year for five years.
Other features in the package:
- Minimum investment from ₹50 crore for some materials and packaging products, up to ₹500 crore for advanced packaging.
- Training support of ₹10,000 per person a month, payroll subsidies, land cost concessions and stamp duty exemption.
- Five years of electricity tax exemption, and a 5 per cent interest subsidy on term loans for six years.
- Local hiring rules: at least half the direct workforce and 60 per cent of jobs paying a basic wage above ₹25,000 a month must go to Tamil Nadu residents.
The policies underneath
The wider pitch is scale. Guidance describes Tamil Nadu as India’s second-largest contributor to GDP and third-largest to exports, with 15.42 per cent of the country’s factories and more than 160 Fortune 500 companies present, on its home page.
The scheme sits within a set of state policies listed on Guidance Tamil Nadu’s semiconductor page:
- Tamil Nadu Semiconductor Mission 2030: a five-pillar plan with a ₹500 crore budget.
- Semiconductor and Advanced Electronics Policy 2024.
- Tamil Nadu Electronics Components Manufacturing Scheme: targets ₹30,000 crore of investment and 60,000 jobs.
- Electronic Hardware Policy 2020: the main policy for electronics assembly, with an online incentive calculator.
Outside Chennai, the agency lists Hosur-Krishnagiri for large electronics manufacturing and component makers near Bengaluru, Coimbatore as an emerging semiconductor equipment hub, and Tiruchi, Tirunelveli and Thoothukudi as growing or upcoming electronics zones. Land has also been earmarked for semiconductor and equipment parks of about 100 acres each at Sulur and near Palladam in the Coimbatore region, according to the agency.
What it means for Chennai
Most of the big electronics plants already sit in the Chennai region, and Guidance says all of India’s iPhone contract manufacturers operate in the state. The companies it lists for electronics include Foxconn, Tata Electronics, Delta, Nokia, Applied Materials and Bosch. On the chip side it names KLA, Qualcomm, MaxLinear, Tessolve, SPEL, CUMI, Coherent and others, much of it design, testing and packaging work rather than wafer making.
Two Chennai projects tie into this:
- A ₹100 crore chip centre near the IIT Madras Research Park. Under the Semiconductor Mission 2030, with TIDCO as a partner, it is planned to combine skills training, micro-fabrication and prototyping on a one-acre plot, DT Next reported on 4 September 2026. It aims to train about 5,000 people from ITI level to PhD. A memorandum was signed in January 2026. The Union electronics ministry said the proposal was still under examination.
- Training at IIT Madras. The institute is already training students in semiconductor skills, including a batch from Manipur whose Chief Minister met them in September 2026, PTI reported.
For job-seekers, the local hiring rules matter most. Watch Guidance Tamil Nadu and TIDCO announcements for training intakes as projects are approved. Investors should take professional advice before relying on any incentive.
Quick answers
What is the Tamil Nadu Semiconductor Ecosystem Scheme 2026?
A state incentive package launched on 15 October 2026 offering 15 to 25 per cent capital subsidies for chip manufacturing, packaging, materials, equipment and testing.
What is the deadline to apply?
Proposals must be submitted to Guidance Tamil Nadu on or before 30 September 2027.
How big is Tamil Nadu’s electronics export share?
US$14.65 billion in 2024-25, or 41.23 per cent of India’s electronics exports, according to Guidance Tamil Nadu.
Is a chip fab coming to Chennai?
No fab has been announced. The Chennai project is a ₹100 crore training and prototyping centre near the IIT Madras Research Park.
Information checked against official sources on 18 October 2026. Fees, dates and rules can change; confirm on the linked official pages before acting.
Sources
- Electronics sector (Guidance Tamil Nadu, Investing in Tamil Nadu)
- Semiconductors sector (Guidance Tamil Nadu, Investing in Tamil Nadu)
- Investing in Tamil Nadu home page (Guidance Tamil Nadu)
- TN announces semiconductor scheme; offers up to 25% subsidy (DT Next)
- Tamil Nadu’s Rs 100-crore chip centre gets ready to roll (DT Next)
- Manipur CM interacts with students selected for semiconductor skill training at IIT Madras (PTI via DT Next)
