Centre Plans DLI 2.0 With 1:1 Co-Funding For Semiconductor Startups

New Delhi, Jan 2 (KNN) The Indian government is preparing the second phase of its Design-Linked Incentive (DLI) scheme for semiconductors, DLI 2.0. It proposes a pari-passu or joint funding model, where the government invests alongside private investors on a 1:1 basis.

Chip makers have raised concerns that the requirement to match private investment may hinder startups and smaller firms from accessing government support, as they might struggle to raise initial capital. 

Officials argue that co-funding ensures market validation and prevents misuse of public funds, reported ET. 

Removal of Investment Cap and Inclusion of Large Players

DLI 2.0 is set to remove the Rs 15 crore cap, enabling projects with investments of several thousand crores. 

Large companies can participate, with venture capital and private investors evaluating bigger projects, similar to past initiatives like the Tata semiconductor fab to de-risk major investments.

The government proposes that companies must repay three times the support if IP is transferred abroad, no repayment is needed if ownership stays Indian. This aims to ensure public funds create Indian-owned IP and protect strategic technology.

Focus Areas and Funding Outlay

DLI 2.0 will focus on chips for consumer electronics, networking, and import substitution, with an outlay of around Rs 5,000 crore, significantly higher than DLI 1.0. 

The co-funding model is intended to test the seriousness of startups and facilitate proof-of-concept development before larger-scale production.

(KNN Bureau)