The Design Linked Incentive (DLI) scheme is a flagship initiative under India’s semiconductor and electronics programme aimed at strengthening domestic chip design capabilities. It supports startups, MSMEs, and companies involved in designing semiconductors, integrated circuits, and advanced electronic systems.
The scheme provides financial incentives, infrastructure access, and technical support to reduce dependence on imported semiconductor technologies. Its long-term aim is to position India as a global hub for semiconductor design and intellectual property creation, while building a self-reliant electronics ecosystem.
What is the Design Linked Incentive (DLI) scheme?
The Design Linked Incentive (DLI) scheme is a Government of India programme that offers financial and institutional support to companies engaged in semiconductor design and innovation. It is part of the broader national mission to develop a strong and self-sustaining semiconductor industry.
The scheme encourages the development of chip design, system-on-chip (SoC) solutions, and related intellectual property (IP) by linking incentives to both development efforts and commercial success in the market.
Why is the DLI scheme needed?
- India is heavily dependent on imported semiconductor chips for key sectors such as electronics, automotive, telecom, and defence
- Global supply chain disruptions have exposed the risks of import dependence
- Semiconductor design requires high investment, specialised skills, and long development cycles
- Many domestic startups lack access to advanced design tools and infrastructure
- There is a strong need to develop indigenous intellectual property in critical technologies
- Growing demand for electronics in India requires a robust domestic design ecosystem
- The scheme supports India’s goal of becoming self-reliant in high-tech manufacturing and design
Key objectives of the DLI scheme
- Promote indigenous semiconductor chip design and innovation in India
- Reduce reliance on imported semiconductor technologies
- Support startups and MSMEs working on advanced chip design solutions
- Encourage development of domestic intellectual property in semiconductor technology
- Build a strong and sustainable semiconductor design ecosystem
- Attract private investment into high-value research and development
- Develop a skilled workforce in semiconductor engineering and design
Eligibility criteria for the DLI scheme
- Applicant must be a registered company, startup, or MSME in India
- Should be engaged in semiconductor design or related research and development activities
- Must have a clearly defined product idea, prototype, or innovation plan
- Should demonstrate technical capability and potential for innovation
- Must comply with applicable regulatory and financial requirements
- Preference is given to companies focusing on indigenous chip design solutions
- Should have a scalable and commercially viable business model
Target segments covered under the DLI scheme
- Semiconductor design startups developing chips and integrated circuits
- MSMEs engaged in electronics system design and embedded technologies
- Fabless semiconductor companies focusing on chip design without fabrication units
- Research institutions and innovation labs working on semiconductor technologies
- Deep-tech hardware startups developing advanced electronic systems
- Companies designing system-on-chip (SoC) and processor technologies
- Organisations creating intellectual property in semiconductor design
Financial incentives under the DLI scheme
- Partial reimbursement of semiconductor design and development costs
- Sales-linked incentives for commercially successful chip products
- Financial assistance for prototyping and product validation
- Grants for research and development in semiconductor design
- Support for intellectual property creation and patent filing
- Funding assistance to scale products from prototype to market stage
- Long-term incentives linked to innovation milestones and performance
Design infrastructure support
- Access to Electronic Design Automation (EDA) tools required for chip design
- Shared semiconductor testing, simulation, and prototyping facilities
- Support for validation and product development infrastructure
- Collaboration with academic institutions and research organisations
- Access to semiconductor design libraries and technical resources
- Mentorship from industry experts in semiconductor engineering
- Support for incubation centres and innovation hubs
How to apply for the DLI scheme
- Register the company or startup on the official scheme portal
- Submit a detailed project proposal outlining the semiconductor design work
- Provide technical, financial, and business documentation
- Apply through designated implementing agencies under the scheme
- Present prototype or proof of concept if required during evaluation
- Undergo expert review and assessment of the proposal
- Receive approval based on merit, feasibility, and alignment with scheme goals
Documents required for DLI application
- Certificate of incorporation of the company or startup
- PAN and GST registration documents
- Detailed project report explaining the semiconductor design plan
- Technical specifications or prototype details, if available
- Financial statements and funding requirements
- KYC documents of promoters or directors
- Proof of innovation such as patents or research documentation (if applicable)
Evaluation criteria and approval process
- Level of innovation and uniqueness in semiconductor design
- Technical feasibility and strength of the proposed solution
- Market potential and scalability of the product
- Experience and capability of the technical team
- Financial viability and long-term sustainability of the business model
- Alignment with India’s semiconductor self-reliance objectives
- Evaluation and approval by expert committees
Key achievements of the DLI scheme
- Increased participation of Indian startups in semiconductor design
- Growth in domestic intellectual property creation in chip design
- Strengthening of India’s deep-tech and electronics innovation ecosystem
- Rising interest from private investors in semiconductor startups
- Improved access to advanced design tools and infrastructure
- Early-stage support for prototype development and testing
- Progress towards reducing dependence on imported semiconductor designs
Challenges with the DLI scheme
- High cost and technical complexity of semiconductor design projects
- Limited availability of advanced fabrication and testing facilities in India
- Long development timelines before commercialisation
- Shortage of skilled semiconductor design professionals
- Dependence on global ecosystems for certain critical design tools
- Strong competition from established global semiconductor companies
- Need for deeper collaboration between industry, academia, and government
Conclusion
The Design Linked Incentive (DLI) scheme is a crucial initiative aimed at strengthening India’s semiconductor design ecosystem and reducing dependence on imports. By supporting startups and MSMEs with funding, infrastructure, and technical assistance, it encourages innovation and long-term technological self-reliance.
For businesses involved in technology development and expansion, external financing can be important. Options such as business loans can support growth needs. It is advisable to review the business loan interest rate before borrowing. You can also use a business loan EMI calculator to plan repayments effectively.
With consistent policy support and sound financial planning, India’s semiconductor design sector can achieve strong global competitiveness in the coming years.
