Karnataka tweaks land allotment policy to secure Rs 3,600-crore US semiconductor project

Cabinet approves allotment of 140 acres at Bengaluru Signature Business Park, near the Kempegowda International Airport, to California-based Applied Materials, one of the world’s largest semiconductor equipment companies, for an R&D and ecosystem development project.

Bengaluru: Karnataka changed its land allotment policy to secure a Rs 3,600-crore American semiconductor project, setting a precedent for similar concessions to future investments as the state looks to tap the expanding chip industry, documents show. 

On April 30, the Cabinet approved the allotment of 140 acres at the Bengaluru Signature Business Park (BSBP), near the Kempegowda International Airport, to California-based Applied Materials, one of the world’s largest semiconductor equipment companies, for an R&D and ecosystem development project.

The company is getting this parcel at Rs 1,288 per sq ft of floor space index (FSI) on a lease-cum-sale basis. This is a deviation from the government’s policy of lease-only allotment at the BSBP.

The government views the Applied Materials project as “a strategic opportunity for Karnataka to anchor a high-value semiconductor R&D and innovation ecosystem”, according to an internal document. This investment comes amid Karnataka’s push to strengthen its semiconductor ambitions, with IT Minister Priyank Kharge accusing Prime Minister Narendra Modi’s office of “arm-twisting” companies to invest in Gujarat.

Land parcels within BSBP will be disposed of through lease-cum-sale basis considering “the need to enable long-term anchor investments” and based on “market feedback indicating preference for ownership-linked certainty for large technology investments”, a note by the Karnataka State Industrial & Infrastructure Development Corporation, which is in charge of the BSBP, states. 

The government has made another policy change while accommodating Applied Materials: land for semiconductor manufacturing and related activities, and investments by globally reputed semiconductor technology companies will be allotted without competitive bidding at the BSBP.

While approving the land allotment, the finance department, which reports to CM Siddaramaiah, added some riders. “To prevent land speculation and ensure the promised Rs 3,600 crore investment is realised, the land shall be held on lease for a mandatory period (minimum 10 years),” it said. 

The government has already spent Rs 433.72 crore on trunk infrastructure at the BSBP. The KSIIDC has projected upcoming expenditures of Rs 780 crore to provide water supply infrastructure. The allotment of land to Applied Materials, at the rate of Rs 1,288 per sq ft of FSI, must cover these costs pro rata, the finance department has said.

Semiconductor Park

The BSBP will now be developed as a Semiconductor Park. The land allotment policy followed in the case of Applied Materials will be used for the remaining 267 acres. 

Spread over 407 acres, the BSBP was originally planned as an international convention centre. It was decided to monetise 63 land parcels on lease basis. In the first phase, 11 plots were offered and tenders invited in December 2024. No bids were received. While authorities were figuring out the next steps, Applied Materials came with its proposal. The government initiated discussions on the project in February this year.