How to setup a Semiconductor Unit in Gujarat

Introduction to the Semiconductor Industry

The electronics ecosystem in the world today is undergoing a transformative shift. The semiconductor unit is at the center of this transformative shift. A strategic and planned semiconductor facility would be the foundation of electronics manufacturing and design. India has launched “The India Semiconductor Mission”, “The SEMICON India 2025 event” and state policies to promote investments with a view to cut down on import dependence.

In this background, Gujarat has come up as an attractive destination. This blog post will take you through the steps to establish a semiconductor unit in Gujarat, right from the market background and government encouragement to the regulatory needs, process to form a company, to  register a company, particularly the location selection in Dholera to the details of the schemes, analysis of industrial policies to formalities.

Reasons for Gujarat in Establishment of Semiconductor Unit

Gujarat provides the following advantages in setting a semiconductor unit:

• Infrastructure is related to ports, logistics, power, water supply, and industrial areas in Gujarat.
• COMPANY'S DEDICATED POLICY: The Gujarat Semiconductor Policy 2022-27. The first ever State-specific Dedicated Semiconductor
• Central location: Areas such as Dholera and Sanand are being created as high-tech nodes.
• Incentives and Approvals: Subsidies on land, power tariff incentives, and quick approval are offered to eligible semiconductor projects in Gujarat.

These factors make a semiconductor unit in Gujarat a viable option for both international and national entrepreneurs.

Government Push – Central & State Roles

Central Government (Union Level):

• 25% capital subsidy for approved electronic & semiconductor components production under Central Incentive (SPECS).
• There is also an "India Semiconductor Mission" in the Ministry of Electronics & Info Technology, which provides financial assistance for fab, packaging, test, and design.
• There was a change in the Special Economic Zones Rules 2006, as the minimum land required for the formation of a semiconductor/electronics component Special Economic Zone is now 10 hectares, as against the earlier 50 hectares.
• The main scheme allows home sales from SEZ units after paying duties.

 

State Government (Gujarat

• Under the Gujarat Semiconductor Policy-2022-27, the below mentioned incentives can be availed: Subsidy of up to 75% on land in Dholera, stamp duty/registration fee refund, power tariff support, and special rates for potable water.
• The state of Gujarat formed the Gujarat State Electronics Mission (GSEM) to give effect
• The central and state leaders assess progress made periodically. Consequently, both central and state levels make efforts to facilitate and nurture an environment for semiconductors where every semiconductor unit of Gujarat gets all possible support.

 

New Location - Dholera (And Sanand)

One of the main zones for investment is in Dholera, in the Ahmedabad district. According to this policy, Dholera is chosen for “Semicon City” type zones, wherein schemes for units are attractive.

Another area where FABs/ OSATs (Outsourced Semiconductor Assembly & Test) facilities have been proposed is around Ahmedabad, in a region known as Sanand.

It is very important for a business like this, which plans to set up a semiconductor manufacturing unit in the state of Gujarat, to decide on an appropriate location for investment, which could be Dholera or Sanand.

SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors)

SPECS is a major incentive scheme that plays an integral part in the initiatives taken by the government's MeitY unit for enhancing the semiconductor and electronics ecosystem in India. It offers a 25% incentives scheme for expenditure incurred for the manufacture of semiconductor components and assemblies, materials and high-precision equipment such as wafers and substrates, IC components, sensors and MEMS devices, passive components, and semiconductor-related chemicals and gases. Additionally, photolithography materials and ATMP/OSAT equipment fall into this category.

The more recent talk of SPECS 2.0 is intended to include more eligible companies and also provide more coverage in the area of deep-tech component production. This is important in the context of the state of Gujarat because the state wants to create a holistic ecosystem in the field of semiconductors—an ecosystem which includes not only fabs but also the suppliers of chemicals, gases, substrates, and equipment.

In regard to investors establishing a semiconductor facility in Gujarat, SPECS plays an enabling role in conjunction with the Gujarat Semiconductor Policy 2022-27, facilitating a stack of funding with state assistance benefits in terms of land subsidy, electricity tariff support, and stamp duty refund. This goes a long way in minimizing CAPEX as well as making component manufacturing in new hubs of Dholera and Sanand a viable option.

Important Initiatives & Schemes - Detailed

Incentives under Gujarat Policy:

• Land subsidy: Subsidy of up to 75% on the purchase cost for the initial ~200 acres of land in Dholera for the qualified units.
• Stamp duty & registration: 100% refund of stamp duty & registration fee.
• Power tariff support: support in terms of low cost of power, like Rs 2 per unit for 10 years for power.
• Water supply: Potable water on a subsidized tariff (for example, Rs. 12/m³) in the first five years.
• Capital expenditure support: “40% of CAPEX assistance approved by Government of India under national schemes” has been provided in the policy as capital expenditure support.

 

Central Scheme Linkages

• For establishing the semiconductor FABs, the fiscal support is approx. 50% under the ISM.
• Amendments to the SEZ regulations to allow smaller pieces of land of 10 hectares, dedicated to the production of semiconductor & electronics components

 

Recent approvals:

• ISL received approval from the Cabinet for Rs 3,300 crore chip assembly facility in Gujarat, ISM.
• The dedicated policy of Gujarat is also bending giant announcements and multinational corporations towards the state.

Such projects offer an enabling environment for establishing a semiconductor division in Gujarat, which is assisted by both government frameworks.

Formalities and Requirements to Set Up the Unit

The process and formalities for establishing your semiconductor division in the state of Gujarat are discussed in this segment, along with formation of the company, registration for the formation of the company, and so on.

Steps for Company Formation and Registration:

1. Structure of corporation: Private Limited, Public Limited or Subsidiary/Joint Venture.

2. Within forming a Company, a distinct name has to be chosen, DSC & DIN needs to be procured, and Memorandum & Articles of Association needs to be prepared and submitted for Incorporation to MCA.

3. Registry of a Company: It is necessary to register a company, required under the Companies Act, after incorporation, filing of fees, after which a Certificate of Incorporation will be obtained.

4. PAN, TAN number, GST number (if applicable), & bank accounts opened after incorporation

5. As far as the semiconductor facility is concerned, it is required to obtain relevant industry registration/permissions (as described below).

Industrial clearances & site approvals:

• Acquire land in the industrial zone: through Gujarat Industrial Development Corporation or Dholera Industrial City Development Ltd.
• Non-agricultural
• Approval of building plan by G
• Environmental clearance / Consent to Establish from Gujarat Pollution Control Board (GPCB).
• High Tension power connection, water supply (for instance, from Gujarat Water Infrastructure Limited if applicable) for industrial use.
• Fire NOC, Factory License from Directorate of Industrial Safety & Health.
• For a semiconductor unit, following are additional technological facilities requirement: Clean rooms, HVAC, Stable Power, Water supply, Wastewater treatment facilities.

 

Incentive application & Fast-track approvals

• Apply for the incentive schemes under state policies through the investor portal, for instance, ifp.gujarat.gov.in.
• The approval and regulation are made through a single window system in this policy.
• Coordination must be done within the required time.

All recent meetings for reviewing highlight coordination between different departments.

Financing and Project Implementation:

• Fabs/OSAT are high-investment projects, entailing thousands of crores (Rs.). Example: Rs. 3,300 crore approved plant.
• Correlate project design parameters like technology node, wafer diameter, packaging/test capabilities to incentive schemes and policy requirements.
• Ensure supply chain links for chemicals, gases, specialty equipment, and labor. Gujarat has strong positioning for upstream expertise in electronics.

As has been stated above, the company formation process and the process of registering a company go complementarily with the industrial structure of the semiconductor unit.

Industrial Policy: Review & Recent Changes

Review of Gujarat Semiconductor Policy:

• Policy period: 2022-27. To enable land allotment, quick clearance, and development incentives for semiconductor and display.
• Gujarat State became the first in the whole of India to enforce a semiconductor policy.
• Features include fiscal support, non-fiscal support through fast-track approvals and self-certification, and special coordination desks.

 

Central amendments relating to the sector:

• A change was notified by the Department of Commerce on 9 June 2025 regarding the reduction in the required land area for the manufacture of semiconductor and electronics components for setting up units under the SEZ.
• In addition, the rule that SEZ land must be absolutely encumbrance free was also relaxed.
• These amendments make way for the formation of exclusive semiconductor units in states such as Gujarat.

 

Significance of Current Approvals:

• The Cabinet approval of the Rs 3,300 crore chip assembly facility in Gujarat has indications of serious government commitment.
• These approvals have assured that Gujarat is ready for the environment and have increased the confidence of companies who want to establish an entity for semiconductors.

 

Implications for company formation, registration, and set-up:

• Clarity in policies and incentives offered, procedures to form companies eased the way to high-tech manufacturing companies, registration.
• Registration and incorporation of the business entity early assist in aligning with reward timelines.
• Investors must monitor and keep a watch on the amendments or notifications even at the state and central levels, as this would help them in optimizing the benefits.

 

Step by Step: Setting Up the Semiconductor Unit

The following is a simplified step-by-step outline for setting up your semiconductor operation in Gujarat.

1. Conceptualization

• Identify product focus: wafer fab, packaging and test (OSAT), assembly, or design
• CAPEX estimation, land demand, utility demand,
• Correlate with incentive thresholds in Gujarat State policy & central programs.

 

2. Corporation

• Process for incorporating companies: determine the structure, acquire DIN, acquire DSC, and incorporate with MCA.
• Register a company under Companies Act, obtain Certificate of Incorporation.

 

3. Site Selection & Land Acquisition:

• Select location, i.e., Dholera OR Sanand – via GID
• Apply for land subsidies according to Gujarat Policy: up to 75% subsidized in Dholera for first 200 acres.
• Non-agricultural conversion, approval of building plans

 

4. Industrial Permissions & Utilities

• Application for GPCB Consent to Establish, Factory License, Fire NOC, HT power connection, water supply.
• Design facilities for clean rooms, HVAC, industrial water/wastewater treatment, and

 

5.Incentive Application & Registration

• Incentive application under the Gujarat State policy through investor portal.
• Verify the requirements for eligibility criteria, CAPEX Milestone attainment, and job creation for semiconductor units.

 

6.Funding & Technology Acquisition:

• Raised equity/debt funding taking into consideration
• Acquire equipment, materials, and collaborate with worldwide technology suppliers, close supply chains.

 

7.Construction & Commission

• Building of infrastructure, cleanroom, and utility infrastructure, and installment of production equipment
• Trial runs, calibration, quality systems, ISO certifications done as necessary.

 

8. Operation & Compliance

• Launch the Initiate Production or
• Adhering to environmental regulations, labour legislation, rules of
• Reporting to state/central agencies regarding disbursement of incentives, monitoring job creation.

 

9.Growth & Expansion

• Enhance capacity, improve technology, meld upstream components, and design/IP development.
• Leverage scheme extensions, R&D incentives, skill development partnerships

The investor would proceed with these steps to form a completely functional unit of semiconductor production with compliance and benefits achievement for Gujarat.

Challenges and Mitigation Measures

Establishing a semiconductor facility is not a simple task, even when good policy incentives are provided. Certain difficulties and ways to address them are presented in the list below:

• CAPEX & gestation periods: The projects involve high capital expenditure and long gestation periods. Solution: Stagger the projects, anchor with incentives, and negotiate long-term contracts.
• Technology & supply chain complexity: Technologies such as equipment, chemicals, gases, and clean rooms involve high complexity. Mitigation: Collaborate with global companies; leverage incentives for sourcing in India; coordinate through the Gujarat policy desk.
• Skill gap in human resources: The skill sets required in semiconductor manufacturing are highly niche. Mitigation: Utilize initiatives of the central and state governments on skill development and collaboration with local engineering colleges: over 350 engineering colleges in Gujarat.
• Utility reliability & infrastructure: The reliability of power, water, HVAC systems, and contamination control must be assured. Solution: Select sites identified in the policy guidelines, where all the infrastructure is provided. Negotiate a contract for utility service. Install redundancy.
• Regulatory Delays: Although most of these have been fast-tracked, every moment of delay increases the expense. Deal with it: Single window operations, documentation related to compliance, and tracking of departmental co-ordination.

 

Conclusion

In a nutshell, setting up a unit for semiconductors in Gujarat provides a great opportunity within the high-tech manufacturing scenario in India, which has been undergoing a dramatically quick changeover. With a well-balanced combination of location strategies, such as Dholera or Sanand location, governmental facilitations at both Centre and state levels, along with a practical approach to setting up a company process, foreign investors will be able to set up the most advanced fabrication, packaging, or test plants. With its own policies, fast-track approvals, heavy subsidies, and connectivity with India’s semiconductor mission in place, it offers a distinctive environment. Recent developments in SEZ policies, Approvals for large projects-the approval for a chip assembling facility with an outlay of Rs 3,330 crores has happened, apart from others-as well as regular ministerial reviews indicate that there's movement in place. To a company so prepared in terms of technology, investment, design, and execution capabilities, Gujarat offers a platform to create a world-class semiconductor facility.

To ensure that such an undertaking, when done in an organized way, will position such an enterprise at the pinnacle of India's semiconducting production effort, such firms should complete the following in the process of incorporating an entity (Company formation process, Registration of company, Land acquisition, Incentives application, Technology/supply chain partners, and Compliance process).