Ready to rule India’s silicon landscape? Karnataka’s new ESDM policy through 2030 unleashes massive subsidies, R&D grants, and a dedicated semiconductor blueprint to anchor India’s tech future.
Karnataka is well on its way to becoming an Indian electronics and semiconductor hub, with a new Electronics System Design and Manufacturing (ESDM) policy framework (covering the years 2023-2030). This will include the establishment of a dedicated semiconductor policy, to be launched shortly.
The Karnataka Innovation and Technology Society (KITS), the implementation agency under the Department of Electronics, IT and Biotechnology, has shared that this framework consists of two types of initiatives: one is the broad-based Karnataka ESDM Policy, which targets new and small businesses; while the other is the Special Incentive Scheme (SIS) for large-scale investment in electronic manufacturing and semiconductor-type industries.
The overall aim of the Karnataka ESDM Policy is to position Karnataka as a global ESDM hub within the next decade by supporting local innovation, attracting capital, creating and retaining highly skilled labour in ESDM-related careers, and ultimately reducing the state’s reliance on imported electronic and semiconductor products.
“We are mainly concentrating on the creation of more jobs, high-tech electronics and chip design and manufacturing and improving the opportunities for the people across the state “ said Mr Pramod L Patil, KAS, General Manager- Karnataka Innovation and Technology Society (KITS).
Who can apply?
The policy covers a broad range of electronics and semiconductor activities, including:
- Semiconductor design and manufacturing
- PCB manufacturing
- Chip components and integrated circuits
- Electronic Manufacturing Services (EMS)
- Design, IP and software services for electronics products
- Telecom equipment, industrial electronics, medical electronics and automotive electronics
- Consumer electronics and IT hardware
To qualify, companies must be registered in Karnataka under the Karnataka Shops and Commercial Establishment Act. The policy also requires that at least 50% of a company’s workforce be based in Karnataka, excluding contract employees.
The state categorises beneficiaries into three segments:
- Startups and MSMEs: Investment below ₹100 million
- Large Enterprises: ₹10 million-₹2.5 billion
- Mega Enterprises: Above ₹2.5 billion
The framework also encourages local sourcing, with value-addition requirements increasing progressively from 25% in the first year to 45% by the fifth year.
Startup-focused incentives
One of the most significant aspects of the policy is the breadth of support available for startups and emerging electronics companies.
Patent-related support includes reimbursement of actual filing costs up to ₹200,000 for domestic patents and up to ₹1 million for international patents.
Companies can also access international marketing incentives that reimburse 50% of participation costs for overseas events, capped at ₹500,000 annually.
For technology development, Karnataka is offering R&D grants of up to ₹20 million per company per year for firms less than seven years old.
Prototype development is another area receiving support. The state reimburses up to 50% of prototyping expenses, subject to a maximum of ₹1 million per year.
Additional incentives include:
- Reimbursement of quality certification and testing expenses up to ₹1 million annually
- Interest subsidy of up to 6% on term loans for five years
- Provident Fund and ESI reimbursements of up to ₹2000 per employee per month
- Support for setting up Effluent Treatment Plants (ETPs)
- Power tariff concessions
- Stamp duty and registration fee concessions
- Land conversion fee reimbursements
Large projects get dedicated incentive scheme
For larger investments, Karnataka is deploying its Special Incentive Scheme, applicable to projects investing at least ₹150 million in new facilities. Expansion projects must meet higher investment thresholds and employment-generation commitments.
The SIS offers a significantly larger basket of incentives, including:
- Capital subsidy on land acquisition
- Production-linked incentive of 1% of annual turnover for five years
- 100% exemption from electricity duty for five years
- Power tariff reimbursement of ₹1 per unit for five years
- Full reimbursement of stamp duty, registration charges and land conversion fees
- Capital subsidy of up to 20% on eligible plant and machinery investments
The scheme applies across electronics manufacturing, semiconductor manufacturing and design, solar cell manufacturing, LED production and other sectors covered under the National Policy on Electronics.
Building the semiconductor ecosystem
Beyond fiscal incentives, Karnataka is also investing in ecosystem infrastructure.
The state-backed Semiconductor Future Accelerator Lab (SUFAL) serves as a dedicated centre for fabless semiconductor startups, offering incubation, mentorship, EDA tool access, investor connections and acceleration programmes spanning 9 to 18 months.
Another initiative, the Lahari Advanced Electronics Test Facility, provides affordable product testing, validation, and certification support for startups, MSMEs, and large enterprises.
“We are mainly concentrating on creation of more jobs, high tech electronics and chip design and manufacturing and improving the opportunities for the people across the state “ said Mr. Pramod L Patil, KAS
These initiatives are designed to address one of the biggest challenges facing India’s semiconductor ambitions: access to infrastructure, talent and commercialisation support.
A dedicated semiconductor policy next
One of the most significant developments for the industry is that Karnataka has confirmed it is working on a separate semiconductor policy. The state currently supports semiconductor-related activities through its electronic systems design and manufacturing framework but will present a more specific approach to semiconductor design, manufacture and supply chains under this policy.
India is placing increased emphasis on electronics manufacturing as a national priority, driving rapid growth in semiconductor-related investment across the country. Karnataka appears committed to maintaining its lead in semiconductor investment through corporate incentives, assistance to start-ups, and related infrastructure, creating a unified framework around its semiconductor programme.
“This story is based on information and policy details presented during the Karnataka ESDM Policy Outreach Program webinar held on June 10, 2026. The webinar featured Pramod L. Patil, KAS, who shared details of Karnataka’s ESDM policy, Special Incentive Scheme (SIS), startup incentives, ecosystem initiatives, and the state’s plans for a dedicated semiconductor policy.”
