The Ministry of Electronics and Information Technology (MeitY) has invited applications from 100 domestic companies, start-ups and MSMEs engaged in semiconductor chip design under the design-linked incentive (DLI) scheme. The scheme was announced back in December last year, as part of a bigger initiative to promote electronics manufacturing in the country.

The Cabinet had approved an outlay of ₹2,30,000 crore to position India as global hub for electronics manufacturing with semiconductors as the foundational building block. Of this, ₹76,000 crore was earmarked for development of semiconductors and display manufacturing ecosystem in the country.

The initiative comes as the world is facing a severe shortage of semiconductor chips with widespread usage in various sectors, from electronics to automobile. The crisis began with stress on supply lines due to the Covid-19-mandated lockdowns, which hindered the flow of raw materials and finished products across the board. With added objectives of shifting China’s dominance over manufacturing and building up India as a replacement, the central government has been taking several steps to promote manufacturing in electronics, associated sectors and more segments.

Indian companies selected for the scheme would be provided financial incentives and design infrastructure support across various stages of development and deployment of semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs), systems and IP cores and semiconductor-linked design for a period of 5 years.

Centre for Development of Advanced Computing (C-DAC), a scientific society operating under MeitY, will serve as the nodal agency for implementation of the DLI scheme, the ministry mentioned in a statement.

The scheme has three components – chip design infrastructure support, product design linked incentive and deployment linked incentive.

Under the chip design infrastructure support, C-DAC will set up the India Chip Centre to host the state-of-the-art design infrastructure used for EDA tools, IP cores and support for multi-project wafer (MPW) fabrication and post-silicon validation, with access allowed to supported companies.

Under the product design linked incentive component, a reimbursement of up to 50% of the eligible expenditure subject to a ceiling of ₹15 crore per application will be provided as fiscal support to the approved applicants who are engaged in semiconductor design.

Under the deployment-linked incentive component, an incentive of 6-4% of net sales turnover over 5 years subject to a ceiling of ₹30 crore per application will be provided to approved applicants whose semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs), systems and IP cores and semiconductor linked design are deployed in electronic products.

The approved applicants who claim incentives under the DLI scheme will be encouraged to retain their domestic status, MeitY said. It means more than 50% of their capital will be beneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and controlled by resident Indian citizens for a period of three years after claiming incentives under the scheme.

An applicant must meet the Threshold and Ceiling Limits to be eligible for disbursement of incentives under the Scheme, the ministry mentioned.

Interested firms can visit the dedicated portal – www.chips-dli.gov.in – for submitting their applications till December 31, 2024. The applicants can find the guidelines of the DLI Scheme on the portal and register themselves for availing support under the scheme, it added.

“The DLI Scheme will also take a graded and pre-emptive approach to identify the products of national priorities and implement strategies for their complete or near complete indigenisation and deployment thereby taking steps towards the import substitution and value addition in strategic and societal sectors,” MeitY stated.

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