Govt may tweak Design Linked Incentive scheme for semiconductor chips

The Ministry of Electronics and Information Technology (Meity) is likely to tweak the incentive structure under the Design Linked Incentive (DLI) scheme for semiconductor chips and allocate funds on a like-for-like basis only to companies or startups that successfully raise funds from angel investors or venture capital (VC) funds.

 

The idea, a senior government official said, is to ensure that only those projects that find some market appreciation get the right funding and guidance from the government.

 

“We also have to ensure that the projects that are approved under the second phase have real-world application and a short lab-to-market timeline,” the official said.

 

Apart from the change in the DLI incentive structure, the IT ministry is also looking to push the selected startups and companies to create more domestically owned intellectual property (IP) rather than relying on work outsourced by foreign companies for the development of new chips, especially in critical areas such as telecom and defence, another official said.

 

The first phase of the DLI scheme was announced as part of the ₹76,000 crore India Semiconductor Mission and provides reimbursement of up to 50 per cent of eligible expenditure for companies and startups, or an incentive of 4-6 per cent on net sales turnover. Apart from the financial incentives, the scheme also provides design infrastructure support to approved companies through the Centre for Development of Advanced Computing’s (C-DAC) ChipIN Centre.

 

So far, the government has approved 24 chip-design projects, which are working to develop chip designs for areas such as video surveillance, drone detection, energy meters, microprocessors, satellite communications, broadband, and Internet of Things system-on-chip.

 

Apart from these, 95 more companies have received access to “industry-grade” engineering and design tools as part of the DLI scheme infrastructure developed by Meity and C-DAC. 

Future-ready  

• Meity likely to allocate funds on a like-for-like basis only to entities that successfully raise money from angel investors or VC funds
• Idea is to ensure that only projects with some market appreciation get the right funding and guidance from govt
• Ministry also aiming to push selected firms to create more domestically-owned IP