Tax Incentives, Faster Clearances, and Flexible SEZ Rules Boost Semiconductor Investments, Say Officials

Tax incentives, faster approvals and flexible SEZ rules are helping India draw semiconductor investments, senior officials said on Wednesday, pointing to Micron’s entry and the recent approval of two new consortiums under the government scheme.

Vimal Anand, Joint Secretary at the Ministry of Commerce & Industry, said investors had earlier flagged gaps in testing policies and regulations, which the government has since addressed through policy changes. “Many other companies are in the pipeline,” he added.

He noted that few challenges still remain particularly at the state level; Land acquisition, local clearances, and utility services often take time.

“But many states are moving forward quickly, and the overall system is becoming far more responsive. Some of the state governments have been pioneers in this journey. They came forward early, extended a helping hand, and created a conducive environment for business. That has been very important in attracting companies to set up operations, including custom facilities,” he added.

JS, Department of Commerce also highlighted that beyond policy support, there are also critical infrastructure needs; industries require reliable power, clean water, and other essential inputs, which may come from different parts of the country.

In the tech industry, as products evolve, the components they use change as well, and regulations adapt accordingly.

R. Ananth, OSD, Customs Policy Wing, Department of Revenue give the instance of display panels in this regard.

“When the original classification and definitions were issued two years ago, they seemed perfectly clear. However, as technologies evolved and new components emerged, certain ambiguities arose. What once appeared straightforward no longer did,” he said.

He added, “In such cases, we have consulted with the industry, carefully examined their concerns, and clarified the policy to eliminate any confusion.”

Both officials clearly highlighted the state government’s role in facilitating ease of doing business for semiconductor companies.

When setting up a plant, requirements like land, environmental clearances, and other approvals come into play. This is where state governments are crucial; the fiscal and non-fiscal policies they implement determine the ease of doing business. At the same time, the central government has also introduced reforms,” added Anand

Officials highlighted a key reform allowing semiconductor investors not only to set up their own plants but also to establish ancillary and light units, that will strengthen the supply chain.

On incentives, they noted that most benefits today come in the form of indirect tax relief, supported by a broader framework that includes single-window clearances and the presence of customs officials at SEZs.