Understanding the Design Linked Incentive Scheme for Semiconductor Design

Design Linked Incentive (DLI) Scheme: A Focus on Semiconductor Design

The Design Linked Incentive (DLI) Scheme, introduced by the Ministry of Electronics and Information Technology (MeitY), aims to cultivate a thriving ecosystem for semiconductor chip design in India. This initiative is part of a larger effort to fortify India's semiconductor industry, which is crucial for enhancing the nation's technological self-reliance and decreasing reliance on imports.

Key Components of the DLI Scheme

• Chip Design Infrastructure Support: This aspect involves the establishment of the India Chip Centre by the Centre for Development of Advanced Computing (C-DAC). It will provide state-of-the-art infrastructure necessary for semiconductor design, including access to Electronic Design Automation (EDA) tools, Intellectual Property (IP) cores, and Multi-Project Wafer fabrication (MPW), as well as post-silicon validation services.
• Product Design Linked Incentive: This component offers financial incentives to domestic companies engaged in semiconductor design. Up to 50% of eligible expenditures can be reimbursed, providing essential fiscal support to facilitate the growth and development of firms working on designs for Integrated Circuits (ICs), Chipsets, System on Chips (SoCs), and other semiconductor products.
• Deployment Linked Incentive: The DLI scheme also provides incentives for the deployment of semiconductor designs in electronic products. Companies can receive incentives ranging from 4% to 6% of their net sales turnover over five years, aimed at promoting the commercialization of domestic semiconductor designs and helping Indian firms bring their innovations to the market.

Significance of the DLI Scheme

The DLI Scheme is a strategic initiative designed to nurture India's semiconductor design industry. It aims to bolster the growth of domestic companies, enhance innovation, and establish a competitive semiconductor ecosystem. By providing both financial and infrastructural support, the scheme ensures that Indian companies can effectively compete in the global semiconductor market.

Moreover, the DLI Scheme promotes the indigenization of semiconductor technologies, assisting in reducing dependency on foreign imports. Its focus on critical sectors such as defense, telecommunications, and electronics is expected to strengthen India's national security and economic resilience. The long-term vision of the scheme is to position India as a global hub for semiconductor design, fostering innovation and empowering companies to achieve higher turnover and increased market presence.

Frequently Asked Questions (FAQs)

Q1. What is the Design Linked Incentive (DLI) Scheme?
Answer: The DLI Scheme, launched by MeitY, aims to support semiconductor chip design in India by providing infrastructure, financial incentives, and promoting indigenization.

Q2. Who benefits from the DLI Scheme?
Answer: Domestic companies engaged in semiconductor design and production can benefit from financial support and infrastructure provided under the DLI Scheme.

Q3. How much reimbursement can companies receive under the DLI Scheme?
Answer: Companies can receive up to 50% reimbursement on eligible expenditures related to semiconductor design under the DLI Scheme.

Q4. What sectors does the DLI Scheme focus on?
Answer: The DLI Scheme focuses on strategic sectors including defense, telecommunications, and electronics to enhance national security and economic resilience.

Q5. What is the long-term vision of the DLI Scheme?
Answer: The long-term vision is to establish India as a global hub for semiconductor design, fostering innovation and supporting domestic companies to expand their market presence.

UPSC Practice MCQs

Question 1: What is the primary objective of the DLI Scheme?
A) To reduce imports of electronics
B) To support semiconductor design in India
C) To promote foreign investments
D) To enhance agricultural output
Correct Answer: B

Question 2: Which organization is responsible for setting up the India Chip Centre under the DLI Scheme?
A) ISRO
B) C-DAC
C) NASSCOM
D) DRDO
Correct Answer: B

Question 3: What financial incentive percentage does the DLI Scheme offer for eligible expenditures?
A) 10%
B) 25%
C) 50%
D) 75%
Correct Answer: C

Question 4: How long is the deployment-linked incentive available to companies?
A) 2 years
B) 3 years
C) 5 years
D) 10 years
Correct Answer: C

Question 5: Which sectors are emphasized in the DLI Scheme?
A) Tourism and hospitality
B) Defense and telecommunications
C) Agriculture and forestry
D) Retail and services
Correct Answer: B