Introduction
India’s Design Linked Incentive (DLI) scheme is transforming with the launch of its second phase, DLI 2.0. This phase will provide financial support to larger Indian companies, moving beyond the initial focus on startups.
The program’s budget will increase, but multinational corporations (MNCs) will be excluded due to concerns about intellectual property (IP) ownership.
This change aims to strengthen India’s domestic semiconductor design sector and keep key technologies in the country.
Overview of DLI 2.0
- Extended Support: DLI 2.0 will offer incentives to larger Indian firms, expanding beyond startups.
- Exclusion of Foreign MNCs: MNCs will not be included due to IP ownership concerns.
- Increased Budget: The budget will rise to better support larger companies and enhance the scheme’s impact.
- Indigenous IP Focus: Companies must keep IP of chip designs within India to qualify.
- Funding Goals: The scheme aims to support 100 Indian semiconductor startups over five years.
Expanded Support for Larger Indian Firms
The original DLI scheme, part of the government’s $10 billion semiconductor initiative, mainly supported Indian startups.
Phase 1 allocated ₹1,000 crore ($120 million) to foster innovation in integrated circuits, chipsets, and system-on-chips (SoCs).
Under DLI 2.0, the scheme will extend to established Indian companies like Zoho, Kaynes, and L&T Semiconductors Technologies.
The government acknowledges the crucial role these larger firms play in advancing India’s semiconductor industry and will provide support to them.
This expansion reflects a strategic shift to enhance the domestic industry beyond its startup phase.
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Foreign MNCs Excluded from DLI 2.0
Despite requests from foreign MNCs operating in India, the government has decided to exclude them from the DLI 2.0 scheme. Major international players like NXP Semiconductors, Qualcomm, and MediaTek, which have substantial chip design centers in India, had hoped to benefit from the program.
However, the government’s decision stems from concerns about the ownership and management of intellectual property.
A government official emphasized, “There are demands from several foreign companies to apply for the DLI scheme.
However, the government remains unconvinced due to concerns over intellectual property ownership and its origins.
This exclusion ensures that the DLI scheme benefits domestic innovation and keeps IP within Indian borders.
Increased Budget for Phase 2
The government plans to significantly boost the budget for the second phase of the DLI scheme. The initial phase’s ₹1,000 crore budget will expand, offering more substantial support to eligible companies.
This increase will better meet the needs of larger firms and enhance the scheme’s overall impact.
The expanded budget will allow for greater financial incentives and support, including higher reimbursement rates for various applications.
This change reflects the government’s commitment to strengthening India’s semiconductor design capabilities and fostering a more competitive industry.
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Focus on Indigenous IP
One of the key conditions for receiving support under DLI 2.0 is the requirement for companies to ensure that the intellectual property (IP) associated with chip designs remains in India.
This policy aims to strengthen India’s position as a hub for semiconductor innovation and keep intellectual property (IP) from moving abroad.
Companies taking part in the DLI 2.0 scheme must meet this requirement, which will help maximize the program’s benefits for India’s economy and technological landscape.
Ambitious Goals for the Semiconductor Ecosystem
The DLI 2.0 scheme aims to fund a total of 100 Indian semiconductor startups over a five-year period.
This ambitious target underscores the government’s commitment to developing a robust semiconductor ecosystem in India.
By supporting both startups and established firms, the scheme seeks to enhance the country’s capabilities in semiconductor design and production.
Conclusion
The second phase of the Design Linked Incentive (DLI) scheme represents a pivotal step in advancing India’s semiconductor industry.
By extending support to larger Indian firms and focusing on indigenous IP, the government aims to build a more robust domestic ecosystem.
Although foreign MNCs will not benefit from this phase, the expanded budget and ambitious funding goals for Indian startups highlight a significant commitment to bolstering the country’s technological capabilities.
As India continues to develop its semiconductor sector, DLI 2.0 will play a crucial role in shaping the future of semiconductor design and innovation in the country.
