Semiconductor Plant Site Selection in India: Why Gujarat, Assam, and Southern Clusters Are Top Picks in 2026?

April 20, 2026

Introduction: India's Semiconductor Ambition and Why Location is the Defining Decision

The semiconductor journey of India has evolved from the realm of dreams into tangible reality. In addition to having over INR 1.6 lakh crore of investments approved through the India Semiconductor Mission (ISM), India is not only emerging as an importing hub but also as a major player in the manufacturing of semiconductors. However, while making bold strides in the semiconductor manufacturing journey, one key decision becomes paramount, location of the manufacturing facility.

A semiconductor facility requires much more than just finding space; factors such as availability of land, reliable power supply, source of ultra-pure water, logistics, and labor become critical. Getting location strategy wrong means facing cost overruns, regulatory challenges, and supply chain disruptions even before the first chip comes off the production line. For those looking to invest in semiconductor manufacturing in 2026, there are five locations that cannot be overlooked.

Why India Is Now a Serious Global Semiconductor Manufacturing Location in 2026?

Several macro-level shifts have converged to make India's semiconductor proposition compelling to global investors this year. 

The Union Budget 2026-27 launched ISM 2.0, sharpening the focus on semiconductor equipment and materials, indigenous IP development, and full-stack design capabilities. The semiconductor allocation was raised by 83% to INR 7,000 crore in 2025, signalling sustained fiscal commitment. As of March 2026, the government has approved 10 semiconductor projects, two fabrication plants and eight ATMP/OSAT facilities, spread across six states.

The number of Indian design engineers constitutes around 20% of the total semiconductor designers globally, working in the design units of Qualcomm, Intel, AMD, Nvidia, and MediaTek. According to a recent estimation, the value of the Indian semiconductor industry is forecasted to range from $45-50 billion in 2024-25 to $100-110 billion by 2030. As announced by Union Minister Ashwini Vaishnaw in March 2026, there will be four plants operating by 2026, while another two will come into operation in 2027, with the first-ever fabrication unit coming up in Dholera in 2028. India aims to rank among the top six semiconductor nations by 2032 and the top three by 2047.

Gujarat: Why Dholera and Sanand Are Leading the Semiconductor Plant Setup in India

In 2026, Gujarat stands out as the semiconductor capital of India. Out of ten approved government semiconductor projects, four are in Gujarat, three are in Sanand, and the fourth is in Dholera. The Gujarat 2022-2027 Semiconductor Policy provides a capital subsidy of up to 40% besides the central incentive, complete exemption from stamp duty, concessional electricity and water charges, and a maximum land subsidy of up to 75% for the first 200 acres acquired for a FAB project.

The project by Tata Semiconductor Manufacturing Corporation, one of its leading projects in Dholera, includes a fab that has been created with an investment of Rs 91,000 crore, which will have the capacity of producing 50,000 wafers each month with an advanced manufacturing process node of 28nm in collaboration with PSMC, Taiwan. On April 9, 2026, the Government of India notified SEZ for this project, spread over an area of 66 hectares, where the goods would be handled in inland container depot on site. This fab will manufacture semiconductors for HPC, EV power management, automobile, defense, and consumer electronics.

Meanwhile, Sanand is establishing itself as India’s first true ATMP hub. In February 2026, PM Modi laid the foundation of Micron Technology’s ATMP unit, which costs INR 22,500 crore for manufacturing DRAM and NAND memory chips. Within a month’s time, Kaynes Semicon’s OSAT unit started operating in March 2026 after only 14 months since breaking the ground. Additionally, CG Power has established an OSAT pilot line in collaboration with Renesas Electronics of Japan and Thailand-based Stars Microelectronics, thus making Sanand home to the country’s first OSAT hub.

The strengths that make Sanand an ideal location for semiconductor companies include closeness to International Airport of Ahmedabad (~30 km away), nearness to ports like Mundra (~325 km away) and Kandla (~276 km away), good railway connectivity, and GIDC industrial area spread across 2000+ hectares. The Chief Minister of Gujarat, Bhupendra Patel, said, “Sanand and Dholera will emerge as a semiconductor valley.”

Assam: The Northeast's Surprising Rise as a Semiconductor Manufacturing Hub

Assam’s emergence in India’s semiconductor landscape was initially unexpected, but its cost advantages and strong policy support are increasingly validating its positioning as a viable investment destination. Tata Electronics is constructing an OSAT/ATMP facility in Morigaon district (Jagiroad) with an investment of INR 27,000 crore. When fully operational, it is expected to produce 48 million semiconductor chips per day and generate approximately 15,000 direct and 11,000–13,000 indirect jobs.

The first phase of making Assam a semiconductor manufacturing hub was targeted for commissioning by April 2026, employing advanced packaging technologies. Finance Minister Nirmala Sitharaman personally reviewed the project's progress at Jagiroad in late 2025, underscoring the central government's commitment to making Northeast India part of the global semiconductor ecosystem.

Why Assam? The state offers competitive land and operating costs relative to western India, proactive governance from Chief Minister Himanta Biswa Sarma's administration, a 40% capital subsidy under Assam's semiconductor policy, and proximity to Southeast Asia's emerging electronics supply chains. The Assam government has also focused on training local youth in semiconductor-related skills, creating a pipeline of semi-skilled and skilled workers that Tata's operation will absorb.

Assam is not just a beneficiary of central policy, it is actively building the infrastructure, talent base, and institutional frameworks needed to sustain a semiconductor manufacturing hub over the long term.

Southern Clusters: Tamil Nadu and Karnataka's Role in Chip Design and ATMP

The south of India brings a different but equally vital dimension to the semiconductor story: deep design expertise and a maturing ATMP ecosystem.

Karnataka is home to Bengaluru, India's primary chip design capital and the location of R&D centres for global leaders including Intel, Qualcomm, AMD, and Synopsys. In November 2025, the Karnataka government announced a 200-acre semiconductor park within the upcoming KWIN City (Knowledge, Wellbeing & Innovation City) near Bengaluru, embedded within a 5,000-acre R&D zone. In February 2025, Lam Research committed over USD 1.2 billion to develop Karnataka's semiconductor infrastructure, focusing on advanced manufacturing equipment and process technology. Karnataka's Electronics System Design and Manufacturing (ESDM) Policy provides capital subsidies of up to 10%, R&D grants, patent reimbursements, and power tariff concessions.

Among the states which provide strong incentives is Tamil Nadu with its offer of up to an additional capital subsidy of 50 percent beyond the incentives from the central government, concessional land allotment, exemption from stamp duty and electricity duty, and interest subvention. With an industrial zone led by the electronics manufacturing zone of Chennai, where companies like Samsung, Foxconn, and Flex already have manufacturing units, Tamil Nadu has developed a supplier ecosystem for semiconductor manufacturing.

Other Emerging Locations: UP, Odisha, Andhra Pradesh, Punjab

Several other states are staking semiconductor claims in 2026, backed by central approvals and state-level policy frameworks.

• Uttar Pradesh (Jewar/Greater Noida): HCL-Foxconn's joint venture is preparing its semiconductor assembly and testing facility in Greater Noida, targeting 36 million display driver chips per month from 2027. UP's 2024 semiconductor policy offers a 50% additional capital subsidy and extensive duty exemptions, though it has yet to attract the volume of projects seen in Gujarat.
   
• Odisha (Bhubaneswar): In August 2025, the Odisha government and MeitY approved India's first silicon carbide (SiC) semiconductor fabrication plant in Infovalley, Bhubaneswar. Developed by RIR Power Electronics, the INR 618 crore investment will manufacture SiC power semiconductors for EVs, renewable energy, and industrial applications, with construction beginning in 2026 and operations targeted for 2028.
   
• Andhra Pradesh: One of four new projects cleared in August 2025 is a semiconductor manufacturing unit in Andhra Pradesh, supported by competitive state incentives and the state's existing electronics manufacturing base.
   
• Punjab: Among the ISM-approved locations, Punjab's semiconductor ambitions are backed by its logistics corridor along the Delhi-Amritsar highway and proximity to northern consumption markets.

Key Site Selection Factors for Semiconductor Plants:

Understanding why certain locations win and others are passed over requires a systematic lens. The following are the critical determinants:

• Land: Scale and Certainty- Semiconductor plants require large, contiguous land parcels with clear title. India has reduced the minimum SEZ land requirement from 50 hectares to 10 hectares for semiconductor projects, easing viability. Greenfield sites in dedicated industrial zones (like Dholera SIR) offer the least friction.
   
• Power: Reliability and Cost- Chip manufacturing demands uninterrupted, high-quality power. Gujarat and Tamil Nadu score highly here, with dedicated industrial power infrastructure and competitive tariffs. Dual power grid subsidies (as offered by UP) are increasingly a baseline expectation.
   
• Water: Ultrapure and Abundant- Semiconductor fabs consume massive volumes of ultrapure water. Proximity to perennial water sources and investment in recycling infrastructure are non-negotiables. This factor often disadvantages landlocked or water-stressed sites.
   
• Logistics: Port Proximity and Connectivity- Given the import-intensity of fab inputs and export orientation of output, multimodal logistics connectivity is essential. Gujarat's port access (Mundra, Kandla) is a primary reason for its dominance. SEZ status with on-site ICD, as at Dholera, further reduces logistics friction.
   
• Talent: Engineers and Operators- Design hubs (Bengaluru, Chennai, Hyderabad) offer deep VLSI and chip design talent. Manufacturing hubs need a different mix: process engineers, technicians, and operators. Proximity to technical institutions and active skilling programmes (as being developed in Gujarat and Assam) is a critical long-term factor.
   
• Policy: State-Level Incentives and Clearance Speed- Financial incentives matter, but their structure and delivery timeline matter more. States like Gujarat have demonstrated execution speed, the Kaynes Sanand plant went from foundation to commercial production in 14 months.

How IMARC Engineering Supports Semiconductor Plant Setup in India?

Choosing a semiconductor facility location in India cannot be done by simple checks. IMARC Engineering provides comprehensive support through all phases: From mapping opportunities in states to comparing incentives offered, utility evaluation (electricity, water, and effluents), logistics evaluation, and assistance with approvals process under ISM, SEZ, and PLI frameworks.

With extensive experience in Gujarat, Assam, and south manufacturing centers, IMARC ensures that policies become implementation decisions.

Conclusion:

The Indian semiconductor industry landscape is changing rapidly. Gujarat tops the list with several approved projects and an expanding semiconductor fabrication and ATMP centering, whereas Assam has emerged as a cost-effective state for manufacturing semiconductors. Design and package states such as Tamil Nadu and Karnataka dominate, with other states such as Odisha, Andhra Pradesh, UP, and Punjab coming up fast.

Site selection for investors is an irreversible process and one which requires thorough research and an understanding of the gap between what government policies offer and actual ground reality. Given that the best sites within important semiconductor corridors have already been reserved, there is need for prompt action.