{"id":279544,"date":"2024-01-24T18:26:03","date_gmt":"2024-01-24T12:56:03","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=279544"},"modified":"2024-01-24T18:26:03","modified_gmt":"2024-01-24T12:56:03","slug":"on-the-semiconductor-design-linked-incentive-dli-scheme","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/on-the-semiconductor-design-linked-incentive-dli-scheme\/","title":{"rendered":"On the Semiconductor Design-Linked Incentive (DLI) scheme"},"content":{"rendered":"

Source:<\/strong> This post on the Semiconductor Design-Linked Incentive (DLI) scheme has been created based on the article \u201cThe need to overhaul a semiconductor scheme\u201d<\/strong> published in \u201cThe Hindu\u201d<\/strong> on 24th<\/sup> January 2024.<\/p>\n

UPSC Syllabus Topic: <\/strong>GS Paper 3 Indian Economy \u2013 Changes in industrial policy and their effects on industrial growth.<\/p>\n

News:<\/strong> The article discusses India\u2019s semiconductor strategy and the issues with the Semiconductor Design-Linked Incentive (DLI) scheme.<\/p>\n

A detailed article on Semiconductor Manufacturing in India<\/strong> can be read here<\/a>.<\/p>\n

Background:<\/strong><\/p>\n

The Semiconductor <\/strong>Design-Linked Incentive (DLI) scheme<\/strong><\/a> has approved only 7 start-ups till now, falling short of its target of supporting 100 over 5 years.<\/p>\n

What are the goals of India\u2019s semiconductor strategy?<\/strong><\/h2>\n
    \n
  1. Reduce dependence on semiconductor imports, particularly from China, and especially in strategic and emerging sectors.<\/li>\n
  2. Build supply chain resilience by integrating into the semiconductor global value chain (GVC).<\/li>\n
  3. Taking advantage of India\u2019s comparative advantage such as the presence of the design houses of every major global semiconductor industry player and Indian chip design engineers.<\/li>\n<\/ol>\n

    What are the issues with the DLI scheme?<\/strong><\/h2>\n
      \n
    1. Barriers on FDI: <\/strong>It mandates that beneficiary start-ups maintain their domestic status for at least 3 years after receiving incentives, and for this they cannot raise more than 50% of their funds via FDI.<\/li>\n
    2. Lack of Domestic Funding: <\/strong>Costs for semiconductor design startups are significant. The funding landscape for chip start-ups in India continues to be challenging due to an absence of a mature start-up funding ecosystem.<\/li>\n
    3. Incentives Not Enough: <\/strong>Incentives under the DLI scheme are not very high, making it unattractive for start-ups (For e.g. it is capped at \u20b915 Crore for Product DLI).<\/li>\n
    4. Issues with the Nodal Agency: <\/strong>As the nodal agency Centre for Development of Advanced Computing (C-DAC) is also a market player in the Indian chip design sector, there are concerns of conflict of interest.<\/li>\n<\/ol>\n

      What should be the way forward?<\/strong><\/h2>\n

      1) Focusing on the Broader Objective: <\/strong>The scheme should focus on facilitating design capabilities within the country, as long as the entity engaging in the design development process is registered in India.<\/p>\n

      2) Focusing on the Design Stage: <\/strong>Stimulating the design ecosystem is less capital-intensive than the foundry and assembly stages of the semiconductor GVC. The financial outlay of the scheme must be enhanced.<\/p>\n

      3) Regarding Nodal Agency Reform: <\/strong>The Karnataka government\u2019s Semiconductor Fabless Accelerator Lab (SFAL)<\/strong>, with its specific partnerships with the Indian Electronics and Semiconductor Association, vendors, IP, and testing companies, could be an appropriate example for an implementing agency for DLI.<\/p>\n

      A recalibrated policy focused on chip design implemented by a capable institution can help establish India\u2019s foothold in this high-tech sector.<\/p>\n

      Question for practice:<\/strong><\/p>\n

      What is the Semiconductor Design-Linked Incentive (DLI) scheme? What are the various issues plaguing it? Suggest steps to reform it.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Source: This post on the Semiconductor Design-Linked Incentive (DLI) scheme has been created based on the article \u201cThe need to overhaul a semiconductor scheme\u201d published in \u201cThe Hindu\u201d on 24th January 2024. UPSC Syllabus Topic: GS Paper 3 Indian Economy \u2013 Changes in industrial policy and their effects on industrial growth. News: The article discusses… Continue reading On the Semiconductor Design-Linked Incentive (DLI) scheme<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,167],"tags":[216,8184,10498],"class_list":["post-279544","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-economy-subject","tag-gs-paper-3","tag-indian-economy","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/279544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=279544"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/279544\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=279544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=279544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=279544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}