SYLLABUS
GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Context: The Ministry of Electronics and Information Technology has sanctioned 24 chip design projects under the Design Linked Incentive Scheme to strengthen India’s fabless semiconductor ecosystem and reduce import dependence.
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- The initiative is part of the larger Semicon India Programme implemented through the India Semiconductor Mission.
- The Union Cabinet had approved the comprehensive Semicon India programme with a financial outlay of INR 76,000 crore for the development of a sustainable semiconductor and display ecosystem in 2021.
- These projects cover strategic areas such as video surveillance, drone detection, energy meters, microprocessors, satellite communications, and broadband and IoT Systems-on-Chip.
- The approvals aim to strengthen India’s domestic semiconductor design capability and help firms move up the semiconductor value chain.
- DLI-supported projects are scaling rapidly, with 16 tape-outs, 6 ASIC chips, 10 patents, 1,000+ engineers engaged, and over 3× private investment having been leveraged.
- Alongside DLI, the Chips to Startup Programme is being implemented to generate about 85,000 industry-ready manpower in chip design at undergraduate, postgraduate, and doctoral levels.
Importance of Semiconductor Design
- Semiconductor chip contributing up to 50% of value addition, 20–50% of Bill of Materials cost (BOM), and 30–35% of global semiconductor sales via the fabless segment.
- The absence of strong fabless capability forces countries to depend on imported core technologies even when electronics are manufactured locally.
- Building a robust fabless ecosystem enables ownership of intellectual property and strengthens long-term technological leadership.
About Design Linked Incentive (DLI) Scheme
- Nodal Ministry: The scheme, launched in December 2021 by the Ministry of Electronics and Information Technology (MeitY).
- Objectives:
- The scheme aims to offset structural disadvantages faced by India’s domestic semiconductor design industry.
- It seeks to promote indigenous chip design and reduce reliance on imported semiconductor intellectual property.
- It focuses on nurturing startups and MSMEs to build a globally competitive fabless ecosystem.
- Eligibility: Startups, MSMEs, and domestic companies owned by resident Indian citizens are eligible beneficiaries.
- Coverage: The scheme supports the entire lifecycle of semiconductor design from development to deployment, covering integrated circuits, chipsets, systems-on-chip, systems, and intellectual property cores.
- Incentives: The scheme provides reimbursement of up to 50 percent of eligible design expenditure subject to a specified cap. It also offers deployment-linked incentives based on net sales for a fixed period.
- Infrastructure Support: The ChipIN Centre provides access to advanced electronic design automation tools, IP core repositories, and prototyping support. The scheme also supports post-silicon validation and testing of fabricated chips.
Achievements under the DLI Scheme
- The scheme has enabled multiple chip design tape-outs and the successful fabrication of indigenous chips.
- It has supported the filing of patents and creation of reusable semiconductor intellectual property cores.
- It has trained and engaged a large pool of specialised engineers across startups and academic institutions.
- It has leveraged significant private investment alongside government support.