India’s push for self-reliance in semiconductors gains momentum as the government plans changes to the Design Linked Incentive (DLI) scheme. The Ministry of Electronics and Information Technology (MeitY) aims to refine funding to favor projects with proven market potential, announced in late April 2026. Under the current DLI, part of the ₹76,000 crore India Semiconductor Mission, approved companies get up to 50% reimbursement on eligible design costs (capped at ₹15 crore per project) and 4-6% of net sales over five years (up to ₹30 crore). Since 2021, it has sanctioned 23 projects for startups and MSMEs, focusing on chips for surveillance, energy meters, and telecom, with 72 firms accessing EDA tools via C-DAC’s ChipIN Centre.
The tweaks target phase two: incentives will match funds raised from angel investors or VCs on a like-for-like basis, ensuring only market-validated ideas receive support. Officials stress shorter lab-to-market timelines and more domestic IP creation, reducing reliance on foreign outsourcing in defense and telecom.
This shift addresses high entry barriers and long cycles in chip design, which drives 50% of value in semiconductors. It builds on successes like shared infrastructure for prototyping and IP cores. With global demand rising, these reforms could boost India’s chip design ecosystem, create jobs, and cut import dependence amid a projected $110 billion market by 2030.
FAQs [Frequently Asked Questions]
1. What is the Design Linked Incentive scheme?
DLI offers up to 50% reimbursement on design costs (₹15 crore cap) and 4-6% net sales incentive over 5 years (₹30 crore cap) to boost India’s semiconductor chip design by startups and firms.
2. What changes are proposed?
MeitY plans like-for-like funding matching VC/angel investments, prioritizing market-validated projects with quick timelines and domestic IP focus over foreign outsourcing.
3. Why these tweaks?
To ensure government funds support viable, real-world projects, reduce risks, promote homegrown IP in telecom/defense, and speed commercialization in semiconductors.