Eligibility and Incentives for Subsidy for DLI Semiconductor Scheme

The subsidy for DLI semiconductor scheme is a landmark initiative by the Government of India to strengthen the country’s semiconductor ecosystem by encouraging domestic innovation, design, and commercialization. Targeting Indian startups, MSMEs, and other domestic companies engaged in semiconductor or semiconductor-linked design, the scheme provides both financial assistance and access to critical infrastructure—empowering India to become a global semiconductor design hub.

Eligibility Criteria :

To be eligible for the subsidy for DLI semiconductor scheme, applicants must:

• Be a domestic company, startup, or Micro, Small, and Medium Enterprise (MSME) actively involved in semiconductor design or related activities.
• Maintain over 50% Indian ownership for at least three years after claiming any of the scheme’s incentives.

This requirement ensures that the benefits of the scheme remain within the Indian ecosystem and contribute to national capabilities in chip design and R&D.

Incentive Categories & Disbursement :

The subsidy for DLI semiconductor scheme provides support through three key components, tailored to the different stages of semiconductor design and commercialization:

1. Design Infrastructure Support :

This component focuses on early-stage development by offering:

• Reimbursement of up to ₹30 Lakh for Multi-Project Wafer (MPW) fabrication and post-silicon validation expenses.
• Upon approval, companies gain access to national infrastructure, including:
• Electronic Design Automation (EDA) tools
• IP Core repository

These resources help reduce the cost of advanced design processes and improve time-to-market, especially for startups and smaller companies.

2. Product Design Linked Incentive (P-DLI) :

The P-DLI component supports product development by reimbursing a portion of the design investment. Features include:

• Up to 50% reimbursement of eligible design costs, capped at ₹15 Crore per applicant.
• The incentive is released upon completion of predefined technical or commercial milestones, such as prototype development, validation, or achieving design certifications.

Eligible expenses can include:

• Tool licensing costs
• Labor and engineering services
• Prototype fabrication
• Testing and debugging
• Third-party IP integration

This structure helps lower the financial barriers for Indian companies working on high-risk, high-tech chip design projects.

3. Deployment Linked Incentive (DLI):

Once a product is commercialized, companies can apply for sales-based reimbursement through the DLI component:

• Offers reimbursement of 6% to 4% of net sales over five years, subject to annual eligibility.
• The total incentive is capped at ₹30 Crore per applicant.
• Funds are disbursed only after meeting predefined net sales thresholds.

Sales Thresholds for Claiming the DLI Incentive:

To qualify for the DLI reimbursement, companies must demonstrate market success by achieving the following annual net sales thresholds during the five-year period:

• Startups and MSMEs: Minimum ₹1 Crore per year
• Other Domestic Companies: Minimum ₹5 Crore per year

Incentive Rates Over Five Years:

The DLI reimbursement rate decreases gradually to promote early revenue growth while ensuring sustained support:

• Year 1 & 2: 6% of net sales reimbursed
• Year 3 & 4: 5% of net sales reimbursed
• Year 5: 4% of net sales reimbursed

This approach allows companies to reinvest revenue in further R&D or scaling operations while being partially shielded from early-stage financial risks.

Strategic Importance of the Scheme:

The subsidy for DLI semiconductor scheme is part of India’s larger Semicon India Programme, which aims to make India a key player in the global semiconductor value chain. The semiconductor market is one of the most strategic sectors in the world, with applications across consumer electronics, telecom, automotive, defense, and industrial automation.

Through this scheme, the government aims to:

• Boost indigenous innovation in chip design
• Attract global and domestic investment in design capabilities
• Create high-skilled jobs and a strong talent pipeline
• Reduce dependency on imports and improve national security
• Strengthen the country's position in global semiconductor supply chains

Benefits to Indian Semiconductor Design Firms:

By applying to the subsidy for DLI semiconductor scheme, companies stand to gain:

• Access to world-class tools and infrastructure without upfront investment
• Significant financial reimbursement that reduces design and go-to-market costs
• Validation and support from a nationally recognized program, improving credibility with customers and investors
• Accelerated innovation cycles, enabling quicker prototyping and product development
• Reduced commercialization risk, allowing startups to scale with confidence

Who Should Apply?

The scheme is ideal for:

• Startups innovating in chipsets, embedded systems, ASICs, or SoCs
• MSMEs working on application-specific ICs or device-level optimization
• Domestic firms developing next-generation semiconductor IP, processors, or controllers
• Indian subsidiaries of global firms with significant domestic ownership

Apply now

If you're building the future of chip design in India, the subsidy for DLI semiconductor scheme offers a robust platform to turn your innovation into impact. With financial incentives, infrastructure support, and a focus on commercialization, the scheme empowers Indian companies to compete on a global scale.

Conclusion:

The subsidy for DLI semiconductor scheme is more than a funding opportunity, it’s a call to action for Indian innovators to lead in the next era of electronics. By lowering the barriers to design, development, and commercialization, this initiative is a powerful driver for a self-reliant, innovation-led semiconductor industry in India.

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