Tamil Nadu: Electronics Hardware Manufacturing Policy

Vision: To transform Tamil Nadu into an innovative and globally competitive Electronics System Design and Manufacturing (ESDM) destination.


  • Provide adequate infrastructure and supporting ecosystem to ESDM companies
  • Attract global major ESDM players to invest in Tamil Nadu
  • Incentivize home-grown start-ups in the ESDM sector both in the component and Original Equipment / product manufacturing subsectors
  • Catalyse the growth of innovation led enterprises involved in the manufacturing of hardware products & solutions
  • To develop the semiconductor fabrication (FAB) industry in Tamil Nadu


The following targets are set for Tamil Nadu Electronics & Hardware manufacturing policy:

  • To increase Tamil Nadu’s electronics industry output to USD 100 billion by 2025
  • To contribute 25% of India’s total electronic exports to the world by 2025
  • To undertake skill training for more than 1,00,000 people (semi-skilled and skilled) by 2024 to meet the incremental human resource requirement projected by NSDC for Tamil Nadu in Electronics and Hardware Manufacturing sector
  • To increase the level of value addition that is done in Tamil Nadu, especially across focus sectors such as Mobile Handsets, LED Products, Fabless Chip Design, PCBs, Solar Photovoltaic Cells, Medical Electronics, and Automotive Electronics
  • To undertake a focused research and development program to achieve the above objectives, and foster an environment of research and innovation
  • To foster a conducive environment for ESDM Start-ups, especially promoting the rapid growth of innovation-led technology enterprises involved in the design, development and manufacturing of technologically advanced solutions
  • To attract at least two major FAB investments to Tamil Nadu in the next three years

Priority sectors

Aligned to the National Policy of Electronics 2019, the Government of Tamil Nadu shall provide special support for developing core competencies in the following sub-sectors:

  • Semiconductor fabrication (FAB)
  • Assembly, Test, Marking and Packaging (ATMP)
  • Fabless Chip Design
  • Medical Electronics
  • Automotive, Aerospace and Aviation Electronics
  • Power Electronics for Mobility
  • Telecom/ Communication Equipment
  • Consumer Electronics and Appliances
  • Strategic Electronics
  • Renewable Energy Electronics
  • Electronic Manufacturing Services (EMS)
  • Electronic Components Manufacturing
  • Electronics Test and Calibration Labs
  • Electronics Product Design & Intellectual Property (IP) registration

Financial Incentives

Financial Incentives for MSMEs: The Government will formulate a special package of incentives for ESDM units in the MSME sector. This will include Capital subsidy, Interest Subvention, Low Tension Power Tariff Subsidy, Generator Subsidy, assistance for obtaining intellectual property and assistance in obtaining certifications. MSMEs will also be assisted to scale up their business to serve as vendor base for large and Mega investors in this sector.

Financial Incentives for Large and Mega Categories

i. Capital Subsidy: The government of Tamil Nadu shall provide capital subsidy based on investment ranges and location for new or expansion manufacturing units in Tamil Nadu. The capital subsidy will be back-ended and based on investment in Eligible Fixed Assets.

ii. Subsidy on Land Lease Cost: For eligible projects in ELCOT /SIPCOT/ SIDCO or any other government-owned industrial parks in C districts, land allotment will be made at 50% subsidised rate for land up to 20% of EFA. For private land in C category districts, 50% subsidy will be offered on the cost of land as per guideline value up to an extent of 50 acres and subject to land cost not exceeding 20% of EFA and a cap of Rs.2 crores. The land cost will be excluded from the EFA calculation if this subsidy is availed.  

iii. Stamp Duty Exemption:

  • A&B districts: 50% stamp duty exemption will be given for purchase/lease of land obtained from ELCOT / SIDCO/ SIPCOT. In the case of private lands, stamp duty concession will be given as 50% back ended subsidy for up to 50 acres on fulfilment of investment and employment conditions under this policy.
  • C Districts: 100% stamp duty exemption will be given for purchase/ lease of land obtained from ELCOT / SIDCO/ SIPCOT. In the case of private lands, stamp duty concession will be given as 100% back ended subsidy for up to 50 acres on fulfilment of investment and employment conditions under this policy.

iv. Training subsidy: Training subsidy of Rs. 4,000 per first time employee per month up to 6 months; and Training Subsidy for Women of Rs. 6,000 per first time employee per month can be availed up to 6 months. Training subsidy shall be disbursed from the actual date of commercial production, but can be claimed for employees recruited and trained before the dating of commercial production. This subsidy is provided only for Native Residents of Tamil Nadu.

v. Interest Subsidy:

  • Large: Maximum 5% interest subvention on actual term loans capped to 0.2 Cr per annum for a period up to 6 years can be availed.
  • Mega: Maximum 5% interest subvention on actual term loans capped to 1 Cr per annum for a period up to 6 years can be availed.

Interest Subsidies will be given against the Corporate Guarantee, which will be released upon fulfilment of employment and investment conditions under the policy.

vi. Exemption of Electricity tax: All new or expansion ESDM units will be given electricity tax exemption for a period of 5 years from the date of commercial production on power purchased from the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) or generated and consumed from captive sources.

vii. Environment Protection Infrastructure: Environment protection infrastructure like Dedicated Effluent Treatment Plants (ETP) and/or Hazardous Waste Treatment Storage and Disposal Facilities (HWTSDF) set up by individual manufacturing units would be eligible for an Environment Protection Infrastructure subsidy and other incentives as per the prevailing industrial policy.

viii. Subsidy for Intellectual Capital and Enhanced Quality Certification:

  • 50% subsidy on the expenses incurred for patent applications limited to a maximum of Rs. 5 Lakh per application to a maximum of Rs 50 lakhs per company
  • 50% subsidy on the expenses incurred for quality certifications such as ISO, ISI, BIS, BEE and ECOMARKor any other national or international certification up to Rs. 1 crore per company.

Financial Incentives for EMCs: EMCs shall be established in accordance with the Modified Electronics Manufacturing Clusters (EMC 2.0) scheme issued by the Government of India dated 1st April 2020. Apart from the assistance provided under the EMC2.0 scheme, the state Government shall extend the following additional incentives to the project implementation agency:

Financial Incentives for Private ESDM park developers: The state Government will encourage the development of Private ESDM parks with common infrastructure, amenities and waste handling facilities. The developers shall be eligible to apply for the following incentives prior to commencement of the park and will be sanctioned by the State Government through the IDC. The financial incentives shall be reimbursed to the developer subject to occupancy of the park by ESDM units to a minimum extent of 75% of the allottable area, no later than four years from the date of sanction of the package by IDC.

Research and Development Support

i. Twin city agreements: To promote research and development in the electronics space, Tamil Nadu Government through its investment promotion agency will strive to enter into twin city agreements with electronics manufacturing cities in countries such as Japan, Vietnam, South Korea, Taiwan, Israel, Singapore etc. Such agreements will promote collaborations through the exchange of experience and information, joint cooperation plans, industry-specific programmes and projects, the establishment of joint expert groups, implementation of skill development programmes and regular expert-level consultations.

ii. University and Industry collaboration in R&D: The state shall strive to promote R&D in the ESDM sector in the state by encouraging collaborations between industry units and technical institutions. In line with the National Policy of Electronics 2019, the GoTN shall strive to promote research, grassroots level innovations and early-stage start-ups in emerging technology areas such as 5G, IOT/ sensors, Drones, Artificial Intelligence (AI), Machine learning, Augmented Reality (AR), Virtual Reality (VR), Additive manufacturing, Gaming and Entertainment, photonics, nano-based devices as well as thrust areas such as Medical Electronics, Defence Electronics, Automotive and Aviation Electronics, Strategic Electronics, Power Electronics and Automation having major economic potential, with a special focus on applying the outcomes, including frugal solutions, to solve real-life problems.

iii. Common Facility Centres: The state shall encourage private sector participation for the creation of at least one common facility centre within greenfield/ brownfield EMCs with facilities such as tool rooms, precision and testing centres, quality certification centre, repair workshops, etc.

iv. Electronics Testing Centre: The Government of Tamil Nadu through ELCOT shall also establish a state-of-the-art electronics testing facility preferably in an EMC to support start-ups, industries, academia etc. involved in the ESDM sector.

Skill Upgradation and Training

i. Skill Development in Electronics System Design and Manufacturing (ESDM): sector Aligned to the Government of India’s Scheme for Financial Assistance for Skill Development in Electronics System Design and Manufacturing (ESDM) sector, Tamil Nadu shall target to skill over 1,00,000 persons each year for the next 4 years in five skilling levels. Tamil Nadu Skill Development Corporation shall act as the State Implementing Agency (SIA) for implementing Schemes on Skill Development in the ESDM sector in Tamil Nadu.

A skill and training centre shall be established within every greenfield/ Brownfield EMC.

ii. Collaborations with the private sector: Tamil Nadu Skill Development Corporation shall collaborate with multinational companies in the ESDM sector to conduct joint training programs and certification courses.

iii. Train the trainer: Through sister-state agreements, the state government shall strive to implement “Train the trainer” programs, and subsidize on case to case basis international faculty travel and stay in India and expenditure incurred by Indian faculty for training programs abroad, subject to a maximum expenditure of Rs. 2Lakh through the Tamil Nadu Skill Development Corporation (TNSDC).

iv. Innovation centred Skills & Competencies Development: By combining the need to harness the latent innovation capacity within students in higher technical education with the demand for upgraded capacity, curriculum, and infrastructure to meet the skills and competencies development objectives, the state aims to transform the latent talent pool available to fuel the growth of the ESDM sector.

The state shall encourage the active promotion of an Innovation led approach to technical education, achieving experiential learning through technology/ product prototyping activities, guided by technology practitioners and industry/ domain experts. The MEC and the MiECs proposed in this policy shall serve as nodal centres to implement such curriculum-linked skills and competencies development working in close association with the public and private institutions in their vicinity. The state shall encourage the implementation of such programs on a statewide basis with the recognition and guidance of Anna University or other reputed institutions. The university is recommended to enable necessary provisions in the engineering curriculum to facilitate the introduction of such innovative models of learning, wherein the institutions engage with independent research labs, incubators etc. to aid in effective implementation. Private sector players in the ESDM sector are encouraged to join hands with private institutions as partners to implement such skill development initiatives indicated above. The state government shall offer financial incentives for such initiatives through the Innovation Vouchers scheme launched by the Dept. of MSME and managed by EDII-TN, and the said scheme shall be suitably modified to facilitate such Innovation centred skill development programs.

v. Special Focus on Semiconductor Fabrication: The Government will take focused efforts to promote the FAB industry in Tamil Nadu. For this purpose, the Government will constitute a Special Task Force to enable the creation of an appropriate ecosystem. Also, a special package of incentives will be offered to investors in the FAB sector.

Start-ups and Venture Capital

Promoting Incubation and Seed Investments in Innovative Hardware Products & Ventures

To catalyse higher growth of the ESDM sector, the GoTN recognizes the need to provide the impetus to Electronics start-ups under the start-up policy of the MSME department.

In line with the National Policy of Electronics 2019, the GoTN shall strive to promote innovation of technologically advanced solutions leading to the indigenous design and manufacturing of hardware products in the emerging technology areas such as 5G, IOT/sensors, Biosensors, Drones, Artificial Intelligence-Machine Learning, Machine Vision, Augmented Reality (AR), Virtual Reality (VR), Additive Manufacturing, Gaming and Entertainment, photonics, Electric Mobility, Nanotechnology devices as well as thrust areas such as Medical Electronics, Defence Electronics, Automotive/Aviation/Aerospace Electronics, Strategic Electronics, Power Electronics, and Automation paving way for the rise of world-class products to emerge from the ESDM sector in Tamil Nadu.

To realise this vision, GoTN shall provide support through the following enabling provisions in the state’s policy:

i. Establishment of world-class Product Innovation, Design and Development facilities

Through this policy, the state government proposes to bring greater thrust into the establishment of world-class infrastructure and facilities for hardware product innovation & design, with the requisite equipment, resources and expertise offered for hardware & electronics product design, specifically facilitating desktop manufacturing and assembly required for low-volume production of pre-commercial designs of industrial-grade hardware solutions. To do so, it is proposed to establish a state-wide Hardware Product Innovation Network consisting of several standalone centres operating in a hub-and-spoke model. The network shall include a Mega Electropreneur Centre (MEC), which will be set up by ELCOT and established in the form of a Centre of Excellence (CoE) for Hardware Products & Ventures to facilitate easy access and to make it practical to build a robust ecosystem for start-ups and entrepreneurs. This CoE shall include a fully self-contained facility to support end-to-end design, development, testing & certification of innovative hardware products.

As an extension of this central node, it is proposed to establish Mini Electropreneur Centre (MiEC) shall be setup by ELCOT in each of the existing and future ELCOSEZs to scale up the footprint of innovation activities to further boost the generation of new hardware and electronics systems, products and solutions. These innovations shall be centred around solving local challenges sourced from the industry, society, or government and shall be undertaken by students in the neighbouring science, engineering and polytechnic institutions, serving as a major boost to skills and competencies development.

Each of these MiECs shall provide necessary office facilities for innovators and start-ups to operate, apart from offering the essential technical infrastructure in the form of innovation labs covering equipment, tools, and other resources apart from access to technical training, support and expertise. The centre shall offer on a self-contained basis all requisite resources for innovators coming up with innovative new hardware product ideas to rapidly develop product prototypes ready for completing customer/field trials, test and certification, and become ready for the first batch of factory manufactured units. This centre shall also serve as the ‘Rapid Product Prototyping Lab’ for the enterprises operating in the ELCOSEZ, made available on a subsidized rental/subscription basis. In addition, this centre shall also serve as a Skills Development Hub on the lines described in the section further below on skills up-gradation and training.

ii. Financial support for operating Incubation and Acceleration Programmes

The state shall encourage the implementation of Hardware start-ups focused accelerator programs combined with Seed capital investments, and shall provide financial assistance in the form of complementary funds offered to mature Technology Business Incubators in TN, which shall avail financial assistance from the schemes such as the TIDE 2.0 scheme launched by MeitY Start-up Hub, Govt of India, NIDHI TBI, NIDHI CoE, NIDHI Accelerator, NIDHI PRAYAS and/or NIDHI EIR schemes launched by Dept of Science and Technology, Govt. of India. The support from GoTN shall be used to augment the operating funds sourced by these incubators.

iii. Innovation Grants & Seed Capital Investments for Hardware Products & Ventures

The state shall adopt an Investment Portfolio approach covering Innovation Grants (grants for prototyping stage hardware product innovators), Start-up Grants (grants for advanced prototyping stage and market entry stage hardware products), and Seed Capital (financial support in the form of Convertible Debt implemented through the Convertible Note or CCPS instruments or in the form of Equity investments). This scheme will be implemented through EDII-Tamil Nadu under the aegis of the TANSIM policy implementation framework.

ELCOT will also support start-ups in the electronics and hardware space in the following ways:

  • Promote the development and acquisition of IPs in ESDM sector
  • Support well-functioning ATAL Tinkering Labs for procurement of new electronic equipment.
  • Establish a cloud server to connect all the incubation centres across the State and make it available to all the start-ups, at low or nominal costs.
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