Government's Semiconductor Incentive Scheme 2.0 Set to Boost Chip Design Industry

New Delhi, Sep 16 (KNN) In a pivotal move for India’s burgeoning semiconductor industry, the government is poised to unveil the Semiconductor Incentive Scheme 2.0 within the next three to four months.

This revamped scheme promises substantial changes that could reshape the landscape of chip design and manufacturing in the country.

The new scheme is expected to extend its support beyond startups, incorporating larger firms engaged in chip design.

Currently, the incentive framework, known as the Design-Linked Incentive (DLI) scheme, predominantly assists startups by reimbursing 50 per cent of their design-related expenditures, capped at Rs 15 crore.

Under the proposed Scheme 2.0, this ceiling is set to be increased significantly, with larger firms also qualifying for a 50 per cent subsidy on their project costs.

Major industry players such as L&T Semiconductor Technologies, Qualcomm, MediaTek, and NXP stand to benefit fr0m this broadened scope.

The updated scheme not only aims to boost the semiconductor design sector but also ensures that intellectual property (IP) of the chips remains within India, adding a crucial condition for eligibility.

Chip design is a critical phase in semiconductor production, laying the groundwork for manufacturing, assembly, and packaging processes.

Currently, the DLI scheme also includes deployment-linked incentives, which provide 4-6 per cent of net sales over five years, subject to a ceiling of Rs 30 crore per application.

These incentives support approved applicants whose semiconductor designs for integrated circuits (ICs), chipsets, and systems are integrated into electronic products.

To date, 13 startups have received approvals under the scheme, with notable projects including Mindgrove Technologies' IoT device chips, Saankhya Labs' SoCs for 5G communication, and MosChip Technologies' smart energy meter ICs.

However, the progress has been hindered by challenges such as finding the right product fit and securing venture capital funding.

The revamped scheme aims to address these issues by fostering indigenously designed chips, particularly in cutting-edge areas like artificial intelligence and data centres.

Electronics and IT Minister Ashwini Vaishnaw has indicated that the new scheme will be an extensive enhancement of the existing framework, encompassing the entire semiconductor value chain—fr0m materials and wafers to fabs and chip assembly units.

The Semiconductor Incentive Scheme 2.0 is expected to significantly impact the semiconductor design ecosystem, offering new opportunities for both startups and established firms.

(KNN Bureau)