Union Government Invites Applications For Design Linked Incentive (DLI) Scheme For Semiconductor Chip Design Firms

The Ministry of Electronics and Information (MeiTY) has sought applications from 100 domestic companies, startups & MSMEs involved in semiconductor design under Design Linked Incentive (DLI) Scheme.

The ministry had notified the scheme on Dec 21.

Under the DLI Scheme, financial incentives and design infrastructure support will be extended to domestic companies, startups and micro and medium enterprises (MSMEs) engaged in semiconductor design or semiconductor linked design.

DLI scheme was part of ₹76,000 crore ($10 billion) package that Modi government announced in December to support all stages of semiconductor ecosystem from specialised fabs for compound semiconductors, silicon photonics and sensors; Assembly, Testing, Marking and Packaging (ATMP) units; display fabs; and semiconductor fabs

The financial incentives as well as design infrastructure support will be provided across various stages of development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design over a period of 5 years.

The scheme aims to help at least 20 domestic companies in semiconductor design for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design and facilitating the to achieve turnover of more than ₹1500 Crore in the next 5 years.

MeiTY has set up a dedicated portal for managing the design incentive scheme

The scheme has two components - Product Design Linked Incentive and Deployment Linked Incentive.

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 for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), Systems & IP Cores and semiconductor linked design.

Under the Deployment Linked Incentive component, an incentive of 6% to 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 & IP Cores and semiconductor linked design are deployed in electronic products.

The approved applicants that claim incentives under the scheme shall retain their domestic status (i.e. more than 50% of the capital in it is 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.

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

The scheme will be operational for 3 years beginning Jan 2022. The fiscal support against the product development linked incentive component of the scheme shall be released after the approval of the application and achievement of milestones as included in the approval letter.

Also read: $10 Billion Incentives On Offer As India Formally Invites Proposals From Firms For Semiconductor Chip Manufacturing, Display Fab Units