Govt to earmark nearly Rs 1,000 crore to support fabless start-ups

Some of these companies are likely to scale up, become global chip design entities

Don’t be surprised if the next global fabless chip design and product company, on the lines of Qualcomm or Broadcom, comes from homegrown entrepreneurs.

The Ministry of Electronics and Information Technology (MeitY) is finalising a plan to earmark close to Rs 1,000 crore to back fabless start-ups in the country. 

Fabless companies are those that design microchips, while the bigger ones contract out the production of the chips.

Based on discussions with stakeholders, the outlay could help over 50-100 start-ups, some of which could be scaled up to become global players. The programme is expected to be announced over the next few weeks.

The support to fabless start-ups is likely to be in four areas — seed funding, assistance during the growth phase, common infrastructure like access to fabs and IP blocks, and computing infrastructure.

The move is part of a larger plan by the government to provide $5 billion for semi-conductor and display fabrication, wearables, and IoT (Internet of Things) devices, and fabless product companies.

Satya Gupta, chairman of the India Electronics and Semiconductor Association (IESA), which has been closely working with the government, says: “The fiscal incentive of Rs 1,000 crore can support up to 100 Indian start-ups in this space. We expect that at least a few of them will become global players. India has phenomenal talent for fabless design and virtually all the top global semiconductor and design companies have their R&D centres here.”  From Intel to Qualcomm, leading global players have made large investments in research and development in the country.

Gupta adds that a fabless start-up in India would require an investment of $5-10 million till the time the first medium complexity chip comes into production. 

“While the government is providing support, the rest of the money has to be raised from venture capital and angel investors,” he says.

As part of the new focus on semiconductors, the government has also invited expression of interest from global companies as well as Indian players in consortium to set up semi-conductor and display fabrication units in the country. Moreover, it has formed a high-powered committee under the minister of commerce and industry to consider project proposals in this space and facilitate such investments in the country.

However, most of these plants require large investments of over $5 billion, and would need a lot of support from the government.

The government has been in talks with major players such as Intel, TSMC, Samsung, Texas Instruments, UMC, as well as others to look at investment in fabless companies in the country.