Design Linked Incentive Scheme – Present and Future

Source: The post  “Design Linked Incentive Scheme – Present and Future’’ has been created, based on “Design Linked Incentive Scheme” published in “PIB” on 5 January 2026. Design Linked Incentive Scheme – Present and Future.

UPSC Syllabus: GS Paper-3- Indian Economy

Context: Semiconductors are critical enablers of economic growth and national security in sectors such as defence, telecom, healthcare, space, and artificial intelligence. Semiconductor chip design contributes nearly 50 percent of value addition and accounts for 30–35 percent of global semiconductor revenues through the fabless segment. The Government of India launched the Design Linked Incentive (DLI) Scheme under the Semicon India Programme to build a self-reliant and globally competitive semiconductor design ecosystem.

Rationale for the DLI Scheme

• Chip design determines the intelligence, performance, efficiency, and security of electronic products.
• Fabless semiconductor companies generate high value addition with relatively low capital expenditure compared to fabrication facilities.
• Without indigenous chip design capability, India remains dependent on imported semiconductor intellectual property despite local electronics manufacturing.
• Strengthening domestic design capability enables India to retain intellectual property, reduce imports, and attract global manufacturing investments.

Objectives of the DLI Scheme

• The DLI Scheme aims to promote indigenous semiconductor design and intellectual property creation in India.
• The scheme seeks to strengthen India’s position in the global semiconductor value chain by supporting fabless companies.
• The scheme aims to reduce import dependence and enhance supply chain resilience in critical sectors.

Eligibility under the DLI Scheme

• Start-ups recognised by the Department for Promotion of Industry and Internal Trade are eligible for incentives under the scheme.
• Micro, Small and Medium Enterprises defined under the MSME notification of 2020 are eligible for financial and infrastructure support.
• Domestic companies owned by resident Indian citizens are eligible for deployment-linked incentives.

Financial Incentives under the DLI Scheme

Product Design Linked Incentive

• The scheme provides reimbursement of up to 50 percent of eligible expenditure incurred on semiconductor design.
• The maximum financial support under this component is capped at ₹15 crore per application.
• The incentive covers the design of integrated circuits, chipsets, systems-on-chip, systems, and IP cores.

Deployment Linked Incentive

• The scheme provides incentives ranging from 4 percent to 6 percent of net sales turnover for a period of five years.
• The maximum incentive under this component is capped at ₹30 crore per application.
• The design must be successfully deployed in electronic products to qualify for incentives.
• The minimum cumulative net sales requirement is ₹1 crore for start-ups and MSMEs and ₹5 crore for other domestic companies.

Design Infrastructure Support

• The ChipIN Centre established by C-DAC provides centralized design infrastructure support under the DLI Scheme.
• Start-ups and MSMEs are provided remote access to advanced Electronic Design Automation tools through the National EDA Grid.
• The scheme provides access to a repository of semiconductor IP cores for SoC design activities.
• The scheme supports MPW prototyping for fabrication at global semiconductor foundries.
• Post-silicon validation, testing, and silicon bring-up support are provided to approved companies.

Achievements of the DLI Scheme

• The DLI Scheme has supported 24 chip design projects in strategic sectors such as surveillance, telecom, defence, and IoT.
• Supported companies have completed 16 chip design tape-outs and fabricated six semiconductor chips.
• Ten patents have been filed by DLI-supported companies, strengthening India’s semiconductor IP base.
• More than 140 reusable semiconductor IP cores have been developed under the scheme.
• Over 1,000 specialised engineers have been trained or engaged through DLI-supported projects.
• Ninety-five start-ups have accessed the national EDA Grid with cumulative usage exceeding 54 lakh design hours.
• Around one lakh engineers and students across 400 institutions have benefited from shared chip design infrastructure.

Institutional Framework Supporting the DLI Scheme

• The Ministry of Electronics and Information Technology provides policy leadership and strategic direction to the semiconductor ecosystem.
• The Semicon India Programme, with an outlay of ₹76,000 crore, provides end-to-end support for design, fabrication, and productisation.
• The Centre for Development of Advanced Computing acts as the nodal agency for implementing the DLI Scheme.
• The Chips to Startup Programme supports capacity building by creating industry-ready manpower in semiconductor design.
• The Microprocessor Development Programme has enabled the development of indigenous processors such as SHAKTI, VEGA, and AJIT.

Future Direction of the DLI Scheme

• The DLI Scheme is transitioning from design validation to large-scale productisation and commercialization.
• Indigenous chip designs are expected to move toward volume manufacturing and system-level integration.
• The scheme will enable wider deployment of Indian-designed chips in defence, telecom, AI, mobility, and space sectors.
• The DLI Scheme will strengthen India’s position as a global hub for fabless semiconductor design.
• Deeper integration with domestic semiconductor manufacturing units will further enhance value addition in India.

Way Forward:

• Establish a national semiconductor innovation fund to support next-generation chip research and early-stage startups.
• Promote industry-academia collaboration, connecting research institutions with startups to accelerate prototype development and commercialization.
• Expand global collaboration programs for IP licensing, technology transfer, and joint R&D projects.
• Develop a robust domestic supply chain for semiconductor materials, EDA tools, and foundry services to reduce dependency on imports.
• Encourage the adoption of open-source microprocessor architectures and promote standardization for interoperability across sectors.
• Implement a mentorship and incubation network for start-ups to navigate regulatory, financial, and manufacturing challenges.
• Strengthen market linkages for DLI-supported designs, including facilitating pilot projects with government departments and public sector undertakings.

Conclusion: The Design Linked Incentive Scheme anchors India in the most strategic segment of the semiconductor value chain, namely chip design. The scheme reduces dependence on imported semiconductor IP and enhances technological self-reliance. By fostering innovation, skilled manpower, and globally competitive products, the DLI Scheme supports long-term economic growth and strategic autonomy.

Question: Examine the significance of the Design Linked Incentive (DLI) Scheme in strengthening India’s semiconductor design ecosystem. Discuss its achievements, future direction, and the way forward.